A period when overall inflation rates are positive but falling is called:
A. disinflation.
B. deflation.
C. zero price level.
D. inflation.
Answer: A
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If the economy is in a recessionary gap, and the government attempts to balance the budget, the effect will be to
a. counteract the recession. b. worsen and prolong the recession. c. end the recession sooner. d. increase the level of real GDP.
Your bike is worth $100 and if you park it outside at school there is a 25% chance that it will be stolen. Your utility function for money is U = (M)2. Assume throughout that the bike value and money are interchangeable since you could sell the bike instantly at its value if necessary. Are you a risk taker?
What will be an ideal response?
Landon demands more sushi as his income increases. From this we can conclude that, for Landon:
A. sushi is a normal good. B. sushi is an inferior good. C. sushi is a complementary good. D. sushi is a substitute good.
Incentives are
A) potential rewards available if a particular activity is undertaken. B) ineffective as a device to get people to behave in a certain fashion. C) inappropriate ways to obtain a certain kind of behavior. D) useless when people behave rationally.