If the economy is self-regulating and in an inflationary gap,
A) wages and prices will fall.
B) wages will rise, but prices will fall.
C) wages and prices will rise.
D) wages will fall, but prices will rise.
E) neither wages nor prices will change.
C
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Adam Smith and David Ricardo worked together to develop the law of comparative advantage.
Answer the following statement true (T) or false (F)
The Fisher equation implies ________
A) the nominal interest rate equals the real rate of inflation plus expected inflation B) the real interest rate equals expected inflation C) expected inflation equals current inflation D) the rate of inflation equals the real minus the nominal rates of interest E) none of the above
On a short-run macro model diagram, the impact of a decrease in government purchases (G) is illustrated by
a. a downward shift of the aggregate expenditure line by the full amount of the change in G b. an upward shift of the aggregate expenditure line followed by an equal downward shift of that line c. a leftward shift of the money supply curve d. a downward shift of the aggregate expenditure line by an amount less than the change in G e. the increase in real income
Related to the Economics in Practice on p. 455: The Consumer Price Index in the United States was 215.3 in 2008 and 214.5 in 2009. If a retiree received a monthly pension check of $3,200.00 in 2008 and his pension is tied to the CPI, how much would his monthly pension check be in 2009?
A. $3174.40 B. $3,188.11 C. $3,200.00 D. $3,214.50