According to Friedman, in which of the following situations is the economy in long-run equilibrium?
A) The average inflation rate over the past five years is 2 percent and the expected inflation rate is 2 percent.
B) The expected economic growth rate is 3 percent and the actual inflation rate is 3 percent.
C) The expected economic growth rate is 2 percent and the expected inflation rate is 2 percent.
D) The expected inflation rate is 3 percent and the actual inflation rate is 3 percent.
D
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The direct exchange of one good or service for another is called
A) a token exchange. B) a standard of deferred payment. C) the exchange of purchasing power. D) barter.
Last year the local government in Spring Town collected one million dollars in revenue from a new tax, but it created a deadweight loss of 500 thousand dollars. What does this tell us?
a. Lost consumer and producer surplus equaled 1.5 million dollars. b. Total consumer and producer surplus equaled 1 million dollars. c. Consumer and producer surplus each equaled half a million dollars. d. The tax increased net welfare by 2 million dollars.
The typical welfare family would be
A. A single woman with 6 or 8 children. B. A single woman with 1 or 2 children. C. A couple about 70-80 years old. D. A childless male in his 30s or 40s.
In the figure above, suppose the original budget line is BD. A fall in the price of a compact disc will
A) rotate the budget line to AD. B) rotate the budget line to CD. C) not move the budget line. D) result in a parallel leftward shift of the budget line.