In the 1970s, the U.S. experienced stagflation. What is stagflation?
a. Low inflation and low unemployment
b. Low inflation and high unemployment
c. High inflation and high unemployment
d. High inflation and low unemployment
c. High inflation and high unemployment
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The liquidity preference theory distinguishes between ________
A) nominal and real quantities B) money and financial assets C) buying goods and earning interest income D) all of the above E) none of the above
Hyperinflation is usually accompanied by a great macroeconomic expansion
a. True b. False Indicate whether the statement is true or false
The target rate of inflation for the European Central Bank (ECB) is:
(a) Above 2%. (b) Below, but close to, 2%. (c) 0%. (d) None of the above, because the ECB targets a rate of deflation.
In a market with barriers to entry:
A. the implications of Adam Smith's theory of the invisible hand can be expected to hold. B. prices will direct productive resources toward underserved markets. C. firms will earn zero economic profit in the long run. D. economic profit will not fall to zero in the long run.