In the early 2000s in Ecuador, the central bank financed the government deficit and created high inflation. The high level of inflation and its relationship to the government deficit are an example of:
A. disinflation.
B. the underground economy.
C. an inflation tax.
D. the central bank dependency.
Answer: C
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In the economic way of thinking, profit and loss can be eliminated only by
A) appropriate and effective price controls. B) careful and detailed government regulation of business. C) a total elimination of uncertainty. D) taxation. E) the confiscation of private property.
The best definition of economics is
A) how choices are made under conditions of scarcity. B) how money is used. C) how goods and services are produced. D) how businesses maximize profits.
If an Albanian company hires a U.S.-based law firm, it is
A) insourcing, from a U.S.-perspective. B) using domestic outsourcing. C) changing into a multinational enterprise. D) vertically integrating.
Single-owner proprietorships often unintentionally exaggerate their profits because they
A. look at after-tax instead of pre-tax costs. B. neglect to consider the opportunity cost of the owner's labor. C. pay their bills late and therefore incur large interest charges. D. forget their explicit losses.