According to the Monetarists, the primary cause of inflation is:
A. large budget deficits.
B. high taxes.
C. rapid expansion of the money supply.
D. government expenditures that are large relative to the size of the economy.
Answer: C
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If the annual inflation rate in an economy is "i", then $1 borrowed at the beginning of a year will have the same purchasing power as ________ dollars at the end of the year
A) (1 - i) B) (1/i) C) (1 + i) D) i
Refer to Scenario 14.1. Marco and Lisette decide to help each other out and agree to split any medical bills from their doctor. With this new arrangement, this scenario resembles a
A) chicken game. B) assurance game. C) battle of the sexes game. D) prisoner's dilemma game.
If a union establishes by collective bargaining a wage rate that is above a competitive market equilibrium wage rate, then
A) an excess quantity of labor will be supplied.
B) a shortage of labor will result.
C) there will be an increase in total employment.
D) management will want to substitute labor for machinery.
What would be the effect on U.S. interest rates if the Chinese and Japanese governments sold all their U.S. government securities?
A. Interest rates would rise. B. Interest rates would fall. C. The selling of Chinese and Japanese U.S. government securities would have very little effect on U.S. interest rates.