The best definition of inflation is a(n):
A. decrease in the general price level.
B. increase in the price of one important commodity such as food.
C. persistent increase in the general level of prices as measured by a price index.
D. increase in the purchasing power of the dollar.
Answer: C
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An economy is better off with an increase in the stock of capital
Indicate whether the statement is true or false
To determine whether an increase in the price of gasoline results in a consumer spending a larger share of their expenditure on gasoline we need to know
A) only how much money the consumer spends on gasoline before the price change B) only the change in the price of gasoline C) only the change in the price of gasoline as a percentage of the original price D) only the own price elasticity of demand for gasoline E) none of the above
One implication of the Phillips curve analysis is that: a. unemployment rates below the natural rate are only possible in the long run
b. unemployment rates below the natural rate lead to falling rates of inflation in the long run. c. if inflationary expectations are accurate, the economy is on the short-run Phillips curve but not on the long-run Phillips curve. d. unemployment rates below the natural rate may be achieved only with rising inflation rates. e. the natural rate of unemployment is strictly a short-run phenomenon.
Suppose A and B are complementary goods. Other things being equal, the demand curve for A will shift to the right when the price of B goes down
a. True b. False Indicate whether the statement is true or false