Describe the main difference between the core inflation rate and the PCE inflation rate
What will be an ideal response?
The core inflation rate excludes the prices of food and fuel.
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Which of the following is NOT a reason that free trade stimulates economic growth?
A) Free trade encourages a more rapid spread of technology. B) Industries have larger markets. C) The importation of technically advanced products enables the country to imitate the technology. D) Free trade keeps domestic prices up, enabling firms to make more profits that can be spent on research and development.
Consider a small open economy with desired national saving of Sd = 1000 + 1000rw and desired investment of Id = 1000 - 500rw. Calculate national saving, investment, and the current account balance in equilibrium when the real world interest rate is
(a) rw = 0.025. (b) rw = 0.05. (c) rw = 0.0.
A $2 tax per gallon of paint placed on the buyers of paint will shift the demand curve
a. downward by exactly $2. b. downward by less than $2. c. upward by exactly $2. d. upward by less than $2.
Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Output will decrease. B) Prices will increase. C) Unemployment will rise. D) Short-run aggregate supply will shift to the right.