The main reason that policy makers are reluctant to force the economy to a zero percent inflation rate is that
A. Unacceptable levels of unemployment might result.
B. Businesses would not be able to raise prices.
C. Real incomes would fall.
D. Businesses would postpone production decisions.
E. The PPI formula would need to be recalculated.
Ans: A. Unacceptable levels of unemployment might result.
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If a rise in the price of oranges from $7 to $9 a bushel increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the
A) supply of oranges is elastic. B) supply of oranges is inelastic. C) demand for oranges is elastic. D) demand for oranges is inelastic.
In the context of the neoclassical growth model, which of the following does NOT explain the growth rates of countries which are initially poor?
A) nations which are below their steady-state growth paths will grow more slowly until they reach the steady state B) the rate of return is higher in poor countries C) capital flows from rich countries to poor countries D) the passage of time allows poor countries to adopt the productive techniques of rich countries.
Draw a two period budget line where the borrow/lending rate of interest, r, allows consumers to choose consumption in each of the two periods. C1 and C2 given their anticipated income on two periods, Y1 and Y2 . The vertical (C2) intercept is
a. b. c. d.
The act of buying a commodity in one market at a lower price and selling it in another market at a higher price is known as:
a. buying long. b. selling short. c. a tariff. d. arbitrage.