A situation in which output decreases while prices increase is often referred to as:
A. inflation.
B. negative economic growth.
C. a recession.
D. stagflation.
Answer: D
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Draw a scatter diagram of the inflation rate and the interest rate. Describe the relationship
What will be an ideal response?
The effect that a gift given to a U.S. citizen from a foreign resident will have on the balance of payments is to
A) increase the current account balance. B) have no effect on the balance of payments if the gift was made in the U.S. C) have no effect on the balance of payments if the gift was made by a foreign country. D) decrease the balance of payments.
An appreciation in the value of the U.S. dollar would
a. encourage foreigners to make more investments in the United States. b. encourage U.S. consumers to purchase more foreign-produced goods. c. increase the number of dollars that could be purchased with the euro. d. discourage U.S. consumers from traveling abroad.
Early settlers in the town of Dry Gulch drilled wells to pump as much water as they wanted from the single aquifer beneath the town. (An aquifer is an underground body of water.) As more people settled in Dry Gulch, the aquifer level fell and new wells had to be drilled deeper at higher cost. In Dry Gulch, the supply of water is:
A. upward-sloping. B. perfectly elastic. C. perfectly inelastic. D. downward-sloping.