Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living—the costs of goods and services we buy—without increasing income in general."
What will be an ideal response?
Disagree. Inflation, in general, must increase both our cost of living and nominal income. The increases in the prices of goods and services will be paid to the factors of production. Since the payments to the factors of production make up national income, nominal income will increase, in general, along with the cost of living.
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In today's world, many countries impose tariffs
A) only on imports. B) only on exports. C) on both imports and exports. D) on imports, exports, and nontraded goods.
According to the Heckscher-Ohlin model:
a. a relatively labor scarce country produces labor intensive goods. b. the labor productivity varies across different countries. c. the technological advancement varies across countries. d. the taste and preference patterns of the consumers are not similar across the countries. e. a capital abundant country exports sophisticated, manufactured products.
The market for new issues of stock is called the
a. primary market. b. secondary market. c. The New York Stock Exchange (NYSE). d. The Chicago Board of Trade.
If the price of inputs rises and foreign income rises:
a. Aggregate demand rises, but aggregate supply does not change. b. Aggregate demand falls, and aggregate supply rises. c. Aggregate demand and aggregate supply fall. d. Neither aggregate demand nor aggregate supply change. e. Aggregate demand rises, and aggregate supply falls.