Explain some of the steps that a government would wish to adopt in an inflationary environment.
What will be an ideal response?
In the case of an inflationary gap, real GDP exceeds potential GDP. In such a case, government would wish to adopt more restrictive fiscal policies to reduce aggregate demand. If an inflationary gap would arise from a continuation of current budget policies, contractionary fiscal policy tools can eliminate it. By cutting spending, raising taxes, or by some combination of the two, the government can pull the C + G + I + (X ? IM) schedule down to a noninflationary position and achieve an equilibrium at full employment.
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Which of the following is not a characteristic of cost-push inflation?
A. Falling unemployment B. Falling real output C. Automatically self-limiting D. Rising general price level
Personal saving is equal to
A. consumption minus disposable income. B. disposable income minus consumption. C. disposable income plus consumption. D. consumption divided by disposable income.
Benjamin works as an economist for the federal government. Which of the following questions is he trying to answer as part of his job?
a. How can I communicate more effectively? b. What is the difference between artificial intelligence and emotional intelligence? c. How can government officials get themselves re-elected to office? d. What is the correlation between race and class? e. How do people use limited resources to try to satisfy unlimited wants?
Suppose the United Auto Workers union obtains a substantial wage increase for auto workers. How will this affect the market for automobiles?