If a consumer is given a $10 gift certificate good only for items in store X, and all items in store X are normal goods, then the consumer desires to consume:
A. the same amount of goods in store X.
B. more goods in store X.
C. fewer goods in store X.
D. None of the statements is correct.
Answer: B
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Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then inflation expectations rise to 2% and inflation rises to 3%. The increase in expected inflation shifts the short-run Phillips curve
a. right. Overall, unemployment moves above its natural rate. b. right. Overall, unemployment moves below its natural rate. c. left. Overall, unemployment moves above its natural rate. d. left. Overall, unemployment moves below its natural rate.
Suppose the United States decides to go back on the gold standard. This should
A) improve the Federal Reserve's ability to target inflation. B) decrease the Federal Reserve's ability to pursue active monetary policy. C) increase the effectiveness of expansionary monetary policy. D) increase the effectiveness of contractionary monetary policy.
Audit failure is the failure of an audit to uncover a ________ and the expected cost of an audit failure is the ________.
A) theft; expected cost of the theft B) mistake; cost of the mistake C) theft; cost of the theft D) mistake; expected cost of the mistake
The monopolistically competitive seller's demand curve will become more elastic the:
A. more significant the barriers to entry. B. larger the number of competitors. C. greater the degree of product differentiation. D. smaller the number of competitors.