Inflation increases the value of money
a. True
b. False
Indicate whether the statement is true or false
False
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The natural unemployment rate
A) is a constant figure of about 4 percent. B) fluctuates with the rate of inflation. C) is the unemployment rate that occurs when the economy is at full employment. D) is equal to cyclical unemployment.
The market demand function for wheat is Qd = 10 - 2P and the market supply function is Qs = 4P - 2, both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a voluntary production reduction program to achieve their goal. What is the size of the aggregate surplus?
A. $4 billion B. $12 billion C. $10 billion D. $6 billion
Insurance companies provide higher insurance premiums to plans with lower deductibles as a way of:
A. reducing the lemons problem. B. avoiding moral hazard. C. screening between types of drivers. D. optimizing information acquisition.
Which of the following statements best describes the relationship between marginal costs and the average variable cost (AVC) curve?
a. The marginal cost curve is below the AVC curve by a fixed amount. b. Marginal costs are equal to average variable costs at the lowest point on the AVC curve. c. Marginal costs are equal to or below the average variable costs at very high output. d. The marginal cost curve is higher than the average variable cost curve regardless of output.