Answer the following statements true (T) or false (F)
1. Demand-pull inflation and cost-push inflation have similar effects on real output in the short run.
2. According to the simple extended AD-AS model, cost-push inflation does not last in the long run if the government leaves the economy alone.
3. According to the simple extended AD-AS model, demand-pull inflation and cost-push inflation have the same effect on output in the long run.
4. When the economy is experiencing cost-push inflation, an inflationary spiral is likely to result when the government adopts a hands-off policy.
5. If the government adopts a "hands-off" policy toward inflation, then the long run effects of cost-push inflation and demand-pull inflation are identical.
1. F
2. T
3. T
4. F
5. F
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For an economy to be in equilibrium at full employment is, according to Keynes,
a. the natural result of the economy process b. always the result of government intervention c. strictly a matter of historical accident d. a matter of convincing investors to match the level of saving in the economy e. an unattainable goal
Which country has had a higher growth rate than the US over about the last 120 years?
a. Argentina b. Germany c. the United Kingdom d. None of the above is correct.
Governments can use public regulation to help solve information problems by:
A. making screening illegal. B. mandating participation in a market or program. C. mandating employers build a reputation before screening. D. All of these statements are true.
A crucial difference between the impact of an import quota compared to a tariff is that:
A. import quotas generate revenue to the domestic government, but tariffs do not. B. import quotas generate no revenue to the domestic government, but tariffs do. C. tariffs increase the prices paid by domestic consumers, but quotas do not. D. both (a) and (c)