Which of the following is true of high and variable rates of inflation?
a. When such rates are present, it will be difficult for people to accurately forecast next year's rate of inflation.
b. Inflation of this type will help promote economic growth and the efficient use of resources.
c. People will respond to such rates by spending more time producing and less time trying to protect their wealth and income from the uncertainty created by the inflation.
d. Inflation of this type will improve the information content delivered by market prices.
A
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Which of the following is a way to tax leisure?
a. Tax complements to leisure. b. Subsidize substitutes to leisure. c. Increase income taxes. d. Tax unearned income.
In calculating gross domestic product, investment refers to the purchase of new ______________ goods.
a. quality b. capital c. government d. superior
When the Fed chooses to target the interest rate target, it loses control over targeting the economy's money supply
Indicate whether the statement is true or false
Dan owns an autographed copy of a Brittany Spears CD that he values at $100. If he sells the CD at the garage sale he's planning to hold in a few weeks, it will be sold to a buyer with a reservation price of $175. If he sells it on eBay, it will be sold to a buyer with a reservation price of $500. eBay will charge Dan $50 to auction the CD, which just covers eBay's opportunity cost of running the auction. Relative to selling the CD at his garage sale, auctioning the CD on eBay will lead:
A. total economic surplus to increase by $100. B. total economic surplus to increase by $500. C. to no change in total economic surplus. D. total economic surplus to increase by $275.