Pure inflation occurs when
A) nominal wages rise faster than all prices.
B) all prices rise faster than nominal wages.
C) all prices and nominal wages rise by the same percentage.
D) the GDP deflator and Consumer Price Index rise by the same percentage.
E) none of the above
C
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In the short run, when the Fed increases the nominal interest rate, the real interest rate
A) permanently falls. B) does not change. C) permanently rises. D) temporarily rises. E) temporarily falls.
One of the productive resources is capital. Capital includes
A) money borrowed from a bank. B) a company's stocks and bonds. C) tools, buildings, and machine tools. D) toys, t-shirts, CD players, and pencils. E) money in a savings account at a bank.
A reduction in the price charged for luncheon specials by a downtown cafeteria will
A) affect the demand (curve) for that cafeteria's luncheons if its competitors react. B) have no effect on the demand for lunch at other downtown restaurants. C) increase the cafeteria's gross revenue from lunch business. D) increase the cafeteria's net revenue from lunch business if the demand is elastic. E) increase the cafeteria's net revenue from lunch business if the demand is inelastic.
In the DMP model, an increase in the unemployment insurance benefit does not, under any circumstances
A) increase the vacancy rate. B) increase the unemployment rate. C) reduce labor market tightness. D) reduce the size of the labor force.