In a particular economy, the price index was 120 in 2012 and 130 in 2013 . Which of the following statements is correct?
a. The economy experienced a rising price level between 2012 and 2013.
b. The economy experienced a higher inflation rate between 2012 and 2013 than it had experienced between 2011 and 2012.
c. The inflation rate between 2012 and 2013 was 10 percent.
d. The base year is 2011.
a
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
A monopolistically competitive firm will
A) always produce at the minimum efficient scale of production. B) have some control over its price because its product is differentiated. C) produce an output level that is productively and allocatively efficient. D) charge the same price as its competitors do.
Banks will keep excess reserves when
A. they do not foresee profitable opportunities to make loans. B. business conditions generally are depressed. C. they do not foresee opportunities to make secure loans. D. All of these responses are correct.
Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This
A) is true and is a justification for tariffs to protect domestic jobs. B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy. C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries. D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages.