Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation.
B. low economic growth and high inflation.
C. high economic growth and low inflation.
D. low economic growth and low inflation.
Answer: B
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If a flat tax plan allowed individuals to deduct a standard allowance of $15,000 and the flat tax rate was 10 percent, an individual earning $12,000 a year would not pay any income taxes
a. True b. False Indicate whether the statement is true or false
Extrapolative expectations work when prices are rising, but not when prices decline.
Answer the following statement true (T) or false (F)
Suppose that over the past decade, U.S. inflation is greater than that in Mexico. Further assume that during this same period, the dollar appreciates relative to the Mexican peso. Given this information,
A) the real exchange rate remains unchanged. B) the real exchange rate must decrease. C) the real exchange rate must increase. D) the real exchange rate can increase or remain the same, but not decrease. E) the real exchange rate can decrease or remain the same, but not increase.
Suppose when a market has four firms, average economic profit is $1,000 per month. When the market has five firms, the average economic profit is -$50 per month. This suggests that
A) the long-run equilibrium number of firms is between four and five. B) the long-run equilibrium number of firms is four. C) the long-run equilibrium number of firms is five. D) there is no long-run equilibrium in this market as profits can never be zero.