Inflation in the U.S. economy tends to be:
A. a finite, one-time event resulting from a shock.
B. ongoing, as increases in aggregate demand generally exceed the increases in aggregate
supply.
C. a finite, one-time event as the Fed actively works to eliminate all inflation.
D. ongoing, as aggregate supply is continually shifting to the left.
B. ongoing, as increases in aggregate demand generally exceed the increases in aggregate
supply.
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If real GDP declines in a given year, nominal GDP ________.
A. must also be increasing B. may either rise or fall C. must also be declining D. is likely to remain constant
When the price level declines
A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve. B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left. C) the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve. D) the interest rate is not affected, so there is no movement along the aggregate demand curve.
If the CPI at the end of last year was 100 and the CPI at the end of this year was 115, the inflation rate was
A) 1.5 percent. B) 15 percent. C) 100 percent. D) 115 percent.
Throughout 2008, inflation and the real interest rate declined together. The cause is a combination of ________
A) monetary policy easing and declining autonomous spending B) declining autonomous spending and movement along a fixed MP curve C) monetary policy tightening and inversion of the MP curve D) increased government spending and movement along a fixed MP curve E) none of the above