Give three examples of why new markets are created every day.
What will be an ideal response?
New technologies create products for needs we didn't know we had, new services for technologies that didn't exist before, and new customers in countries with fast-growing economies. An example of this is the MP3 player. Prior to the introduction of MP3 technology, consumers did not need a small, handheld device to store and transfer recorded music. The creation of this technology resulted in a complete shift in the distribution of music.
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Millions of people wake up each morning, they get dressed and go to work by travelling on our nation's freeways early in the morning during rush hour
Why might this seemingly private activity actually result in a negative externality? Why might motorists not really worry about it very much?
Unanticipated inflation always benefits somebody, so the overall cost cannot be higher than it is for anticipated inflation. Comment
What will be an ideal response?
Which of the following is an appropriate monetary policy if the Fed wants to increase the money supply?
a. An increase in the required reserve ratio. b. An increase in the discount rate. c. Purchases of bonds in open market operations. d. Higher taxes on interest income.
Over long periods of time, the CPI and PPI generally reflect the ______ rates of inflation
Fill in the blank(s) with the appropriate word(s).