Zero inflation
a. might be dangerous because it could lead to rapidly increasing prices.
b. would limit the flexibility of the labor market and so could at times raise unemployment.
c. would make it easy for the Central bank to create negative real interest rates.
d. is impossible to achieve in the real world.
b
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Explain how the outcome of the Cournot model is achieved
What will be an ideal response?
A key difficulty facing insurance companies is that people know more about their health than do insurance companies, and that those people who are seriously ill are the most likely to want to obtain health insurance
What is this phenomenon called? A) asymmetric information B) moral hazard C) economic irrationality D) adverse selection
Minimum wage legislation:
a. sets a price ceiling above the market-clearing price. b. has no impact if the minimum wage is above the market-clearing price. c. has the same impact in all labor markets. d. creates unemployment when the minimum wage is above the equilibrium wage. e. is opposed by organized labor.
If there is a decrease in demand for lettuce, we would expect:
A. both the price and quantity sold to increase. B. both the price and quantity sold to decrease. C. the price to decrease and the quantity sold to increase. D. the price to increase and the quantity sold to decrease.