When inflation occurs
A. each dollar of income will buy more output than before.
B. the purchasing power of money decreases.
C. the purchasing power of money increases.
D. all prices are rising.
Answer: B
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An exchange-rate system in which the nominal exchange rate is set by the government is known as
A) a flexible exchange-rate system. B) a floating exchange-rate system. C) a fixed exchange-rate system. D) an exchange-rate union.
Which of the following statements is CORRECT?
A) Compared to stocks, bonds have a higher return. B) Compared to stocks, bond returns have a higher standard deviation. C) Compared to bonds, stock returns have a lower standard deviation. D) Compared to bonds, stock returns have a higher standard deviation.
The Lerner index measures
A) a firm's potential monopoly power. B) the amount of monopoly power a firm chooses to exercises when maximizing profits. C) a firm's potential profitability. D) an industry's potential market power.
If quantity demanded is greater at each price, we say that there has been
A. an increase in supply. B. an increase in demand. C. a decrease in supply. D. a decrease in demand.