As inflation increases, households become ________ uncertain leading to ________ spending.
A. less; less
B. more; more
C. less; more
D. more; less
Answer: D
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If a 10% currency appreciation results in a 10% decrease in the price of imported goods, then this is called
A) a complete pass-through. B) the Marshall Lerner condition. C) a partial pass-through. D) import inflation.
If the government imposes a price ceiling that is lower than the market clearing price, then
A) consumer surplus will increase while producer surplus will decrease. B) consumer surplus will decrease while producer surplus will increase. C) both consumer surplus and producer surplus will decrease. D) both consumer surplus and producer surplus will increase.
In long-run equilibrium for the monopolistically competitive firm, the equilibrium point
a. at the highest part
b. close to the highest part
c. at the lowest part
d. close to the lowest part
A policy of fiscal austerity could have difficulty lowering the debt-to-GDP ratio because it might:
A. lower both GDP growth and government revenue. B. lower potential output and government spending. C. raise potential output and government spending. D. raise both GDP and government revenue.