Starting from long-run equilibrium, a favorable inflation shock results in a short-run equilibrium with ________ inflation and ________ output.
A. lower; lower
B. higher; higher
C. higher; lower
D. lower; higher
Answer: D
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The speculative demand for money is the stock of money that people hold to:
a. pay their predictable, everyday expenses. b. pay for any unexpected expenses that may occur. c. buy stocks, bonds, and other financial assets. d. buy the foreign currencies needed to purchase imports.
The unemployment rate is the number of unemployed people, expressed as
a. a ratio of total employed to the population. b. a ratio of unemployed to the total employed. c. a percentage of the labor force. d. a percentage of the population.
All of the following are true if both the upstream and downstream firm have market power except which one?
A) Both the upstream firm and the downstream firm set a price that exceeds their respective marginal costs. B) If the two firms were to merge, the combined firm would earn the same profit than if they did not merge. C) This situation is referred to as a successive monopoly. D) This situation is referred to as double marginalization.
Explain how the following will affect the relative values of the dollar and the English pound
a. Income growth is higher in the United States than in England. b. Inflation is higher in England than in the United States. c. Real interest rates are higher in the United States than in England.