The Japanese economy has been consistently weak throughout the 1990s. This has caused a slight deflation, illustrating the
a. negligible cost of eliminating inflation.
b. very slow operation of the economy's self-correcting mechanism.
c. tendency of inflation to accelerate during recessions.
d. rapidity with which inflation can be stopped.
b
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Which of the following describes the reason why scarcity exists?
A. Governments make bad economic decisions. B. The gap between the rich and the poor is too wide. C. Wants exceed the resources available to satisfy them. D. There is too much unemployment.
Everything else held constant, an increase in autonomous consumer spending will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
In a Bertrand model with differentiated products,
A) firms can set price above marginal cost. B) firms set price at marginal cost. C) price is independent of marginal cost. D) firms set price independently of one another.
Using typical estimates of the sacrifice ratio, how much output would likely be sacrificed to reduce inflation from 4 percent to 2 percent?