Increases in aggregate demand are likely to create
a) deflation during recessions
b) inflation when the output gap is quite negative
c) higher output when the output gap is negative, and inflation when output is at capacity
d) reductions in output if the output gap is already positive
e) both inflation and recession
c) higher output when the output gap is negative, and inflation when output is at capacity
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A main argument against indexing is that: a. it can worsen inflation
b. it can reduce asset prices. c. transaction costs are too high. d. it could lead to deflation.
When externalities are present, reaching an efficient outcome is especially difficult when the number of interested parties is large
a. True b. False Indicate whether the statement is true or false
In a perfectly competitive world:
A) two-way trade would not occur. B) one-way trade would not occur. C) neither one-way trade nor two-trade would occur. D) both one-way trade and two-way trade would occur.
If the price elasticity of supply is equal to zero and the price was to rise, the quantity supplied would:
A. decrease slightly. B. fall to zero. C. not change. D. increase.