When the misery index is used to judge macroeconomic conditions, reducing inflation by one percentage point
A) has no effect at all on how we judge the economy's performance.
B) is of less benefit to the economy than reducing the unemployment rate by one percentage point.
C) gives the same benefit to the economy as reducing the unemployment rate by one percentage point.
D) is of greater benefit to the economy than reducing the unemployment rate by one percentage point.
C
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When a government subsidy is granted to the sellers of a product, buyers can end up capturing some of the benefit because
a. the market price of the product will fall in response to the subsidy. b. the market price of the product will rise in response to the subsidy. c. the market price of the product will not change in response to the subsidy. d. producers will reduce the supply of the product.
Steve takes $500 from his paycheck and uses it to purchase U.S. Savings Bonds. Based on this information:
A. Steve has a capital gain of $500. B. Steve's saving has increased by $500. C. Steve's saving has decreased by $500. D. Steve's wealth is unchanged.
If expected inflation increases:
A. the short-run Phillips curve remains unchanged. B. the short-run Phillips curve shifts up. C. the short-run Phillips curve shifts down. D. there is a movement along a short-run Phillips curve.
In each of the following scenarios, explain why the euro will appreciate or depreciate in a system of floating exchange rates. (A) A recession in Germany cuts German purchases of American goods. (B) American investors are attracted by prospects for profit on the Frankfurt Stock Exchange. (C) Interest rates on government bonds rise in the United States but remain stable in Germany.
What will be an ideal response?