The ________ is the rate of change of the ________.
A. base year price index; current year price index
B. rate of inflation; CPI
C. current year price index; base year price index
D. CPI; rate of inflation
Answer: B
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How are the nominal and real demands for money related to changes in the price level?
What will be an ideal response?
The LM curve
A) is horizontal. B) is vertical. C) slopes downward. D) slopes upward.
When would it be plausible to describe the demand for a product by drawing a straight line, Q = a - bP?
A. Only if no important factors other than price affect demand B. In the vast majority of scenarios C. Practically never D. If we believe that factors other than price alone determine demand
The real exchange rate is defined as:
A. the nominal exchange rate plus the rate of inflation. B. the exchange rate that would exist if nominal rates were not fixed by governments. C. the spot exchange rate. D. the cost of a basket of goods and services in one country compared to the cost of the same basket in another country.