Discuss the costs associated with high inflation
High and variable inflation rates make it almost impossible to set long-term contracts because prices and interest rates may be changing by the day, or even by the hour. In its extreme form, inflation can lead to a complete erosion of faith in the currency. Unchecked inflation can ultimately lead to hyperinflation. In addition, higher inflation rates make it difficult for households and firms to distinguish between changes in the relative prices of individual goods and services and changes in the general price level.
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Which of the following is included in the GDP?
A) the current services flowing from the housing stock B) the estimated value of drugs sold illegally C) the estimated value of leisure time D) transfer payments such as Social Security and veterans' benefits E) private purchases of used assets
In 1820, when the nation began its westward movement in earnest, the median American was
(a) less than 17 years old. (b) about 20 years old. (c) about the same age as the median American today. (d) older than the median American today.
People react to an excess supply of money by:
a. selling bonds, thus driving up the interest rate. b. selling bonds, thus driving down the interest rate. c. buying bonds, thus driving up the interest rate. d. buying bonds, thus driving down the interest rate.
Middle-aged workers being paid more than their younger counterparts is likely due to
A. workers prefer delaying their earnings to as late in life as possible. B. firms using a delayed compensation scheme. C. the natural inverse relationship between age and experience. D. the implementation of a mandatory retirement age by the firm. E. more recent education and job training programs being more effective than older programs.