Inflation is an overall:
A. rise in prices in the economy.
B. decline in prices in the economy.
C. decline in prices in the economy, excluding those with historically volatile price changes.
D. rise in prices in the economy, excluding those with historically volatile price changes.
Answer: A
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Wichita is building a convention center and financing it with revenues raised from a city hotel tax. Local politicians assert that the convention center is essentially free for Wichita residents because out-of-town visitors are paying for it
Someone who is practicing the economic way of thinking would disagree because A) they believe that Wichita does not need a new convention center. B) there are other projects that could be undertaken with the tax funds. C) the convention center may not pass a marginal cost-benefit test. D) the hotel tax may lead to a decline in visits to Wichita. E) the hotel tax may reduce commercial property values in the area.
A tax cut that raises the after-tax wage rate will most likely result in more hours worked if
A) tax rates were low already. B) the relevant portion of the labor supply curve is upward sloping. C) the relevant portion of the labor supply curve is downward sloping. D) workers can be easily fooled.
We may not be able to fully remove risk by diversification if:
A) a completely risk-free asset does not exist. B) the asset returns in our portfolio are positively correlated. C) buying stock on margin is not allowed by financial regulators. D) none of the above
If an economy is growing, but experiences no inflation, this means
a. aggregate demand increased, but aggregate supply did not. b. aggregate supply decreased, but aggregate demand did not. c. aggregate demand and aggregate supply increased by the same amount. d. aggregate demand and aggregate supply decreased by the same amount.