What is meant by the term inflation bias?
A) when policymakers allow exchange rates to continually depreciate and are willing to accept higher rates of inflation
B) when policymakers accept higher rates of inflation and are willing to allow exchange rates to continually depreciate
C) when policy makers use expansionary monetary policy for short-term gain, at the expense of higher inflation in the longer run
D) when fiscal policymakers use deficit financing to stimulate the economy at the expense of higher long-run inflation
Answer: C) when policy makers use expansionary monetary policy for short-term gain, at the expense of higher inflation in the longer run
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Refer to Figure 5-6. Why is there a deadweight loss?
A) because the marginal private cost for each additional unit between Q1 and Q2 exceeds the marginal private benefit B) because the marginal private benefit for each additional unit between Q1 and Q2 exceeds the marginal cost C) because the marginal social cost for each additional unit between Q1 and Q2 exceeds the marginal social benefit D) because the marginal social benefit for each additional unit between Q1 and Q2 exceeds the marginal cost
Which of the following correctly describes the trend in the federal budget during the 1980s? a. Federal spending declined relative to GDP, while federal revenues rose relative to GDP. b. Federal spending rose relative to GDP, while federal revenues declined relative to GDP. c. Balanced budgets were passed through cooperation between the President and Congress. d. The dollar depreciated,
thereby lowering the deficit. e. The budget deficit decreased and then disappeared, turning into a surplus in the 1980s.
The additional benefit received as a result of undertaking an action is: a. the opportunity cost. b. the marginal cost
c. the marginal benefit. d. the total benefit.
When a firm creates an industry,
A. it is there forever. No other firm can enter. B. the firm's economic profit will stabilize. C. depending on the ease of entry, the firm's economic profit is likely to diminish. D. the firm's economic profit will rise because other firms will enter.