What do people base their expected inflation rate upon?
What will be an ideal response?
People's expected inflation rate depends on the recent data about inflation, that is, on their recent experiences with inflation. It also depends on economic principles that help to interpret the data of recent experience. People form a rational expectation of the inflation rate, which is the inflation forecast resulting from using all the relevant data and economic science.
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An example of price discrimination is the price charged for:
a. an economics textbook at a campus bookstore. b. gasoline. c. theater tickets that offer lower prices for children. d. a postage stamp.
Explain the impact on the monetary policy reaction curve and the nominal interest rate if the level of government purchases were to decrease and the central bank does not change its inflation target?
What will be an ideal response?
This graph demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good.
As shown in the graph, when a government imposes a quota, consumer surplus will:
A. increase by EFGH. B. increase to ABCD. C. decrease by EFGH. D. decrease by FG only.
Wealth is considered to be a
A. stock. B. flow. C. nontaxable stream of funds. D. resource.