Which of the following explains why deflation is bad for consumers?
a. It reduces the purchasing power of money
b. It precedes a long recession.
c. It creates a spike in unemployment.
d. It makes financial decision making more difficult.
d. It makes financial decision making more difficult.
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Use the following diagram to answer the next question.
If CD is the economy's current production possibilities frontier, what is the most likely reason for operating at point X?
A. increases in the quantity and the quality of resources B. improvement in labor productivity and the number of work-hours C. technological progress and industrial change D. unemployment and inefficient allocation of resources
Information can be thought of as a
A) non-economic piece of data. B) violation of the invisible hand idea that the pursuit of self-interest promotes social interest. C) good whose marginal benefit is infinite. D) good whose marginal benefit decreases as more information is acquired.
In the efficiency wage model with the efficiency wage above the market-clearing wage, the level of employment depends on
A) the intersection of labor supply and labor demand. B) the marginal productivity of capital and the marginal productivity of labor. C) labor demand alone. D) labor supply alone.
Using aggregate supply and demand curves drawn according to the Keynesian view, which of the following will occur if the Fed buys bonds in the open market and the economy is below full employment?
A. Aggregate demand will shift to the left and the unemployment rate will rise. B. Aggregate demand will shift to the right and the unemployment rate will fall. C. Aggregate demand will shift to the left and the price level will remain unchanged. D. Aggregate demand will shift to the right and the price level will fall.