How do high rates of inflation affect the acceptability of a nation’s currency?
What will be an ideal response?
High rates of inflation reduce the purchasing power of a nation’s currency. From the time the currency is received to the time that it is spent, fewer goods and services can be bought with that currency. Businesses and workers may not want to hold currency that loses value quickly because of high inflation. They may look for alternative currencies to hold or other assets that do not lose value. These actions reduce the economic efficiency provided by the institution of money. It is also difficult for consumers to evaluate prices as a reflection of the value of a product as the prices are changing rapidly.
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A producer can raise profit by expanding output if his:
a. marginal revenue is equal to marginal cost. b. marginal revenue is less than marginal cost. c. marginal revenue is negative. d. marginal cost is negative. e. marginal revenue is greater than marginal cost.
Economist John Maynard Keynes is famous for saying, "In the long run, we are all dead." He is referring to the:
A. fact that no policy can affect the long-run equilibrium. B. notion the economy is sure to collapse in the long run. C. length of time it can take the economy to recover to potential GDP without policy intervention. D. permanent inflation that results in long-run adjustments.
There have been __________ recessions since World War II that have lasted over one year.
A. one B. two C. three D. four
?Kites /hourSnowboards /hourJesse81April123
Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 3.2 shows how much of each good Jesse and April can paint in one hour. Which of the following is true?
A. April has an absolute advantage in painting kites but not snowboards. B. April has an absolute advantage in painting snowboards but not kites. C. April has an absolute advantage in painting both goods. D. April does not have an absolute advantage in painting either good.