Which of the following is the primary cause of inflation?
a. an increase in the quantity of money
b. an increase in government spending
c. an increase in unemployment
d. an increase in productivity
a
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Why are many economists skeptical of the Fed's ability to fine tune the economy?
A) Monetary policy only affects output in the long run. B) Lags in policy make it difficult to properly time policy. C) Fiscal policy can be implemented more quickly than monetary policy. D) Monetary policy does not have any effect on output.
Rent Control
Read William Tucker's article on rent control (published by the Cato Institute). Questions: What was the original intent behind rent control? Why did voters in Boston decide to eliminate rent control? The author argues that rents are higher in cities in which rent control exists than in cities without rent control. Does this necessarily suggest that rent control raises the rental rate for housing? Is there another possible interpretation? Use a diagram containing demand and supply curves to illustrate the effects of rent control on the quantity of housing demanded and supplied. Briefly describe the "shadow market" for housing existing in New York City. How might the existence of this market account for the large difference between median gross rent and median advertised rent
When a country imposes a tariff to protect a domestic monopolist from international competition, it will produce _______ output and charge _______ in a perfectly competitive domestic industry.
a. more; a higher price than b. the same; the same price as c. less; a higher price than d. less; a lower price than
The market system's answer to the fundamental question "How will the system accommodate change?" is essentially:
A. "Through government leadership and direction." B. "Through the guiding function of prices and the incentive function of profits." C. "Through training and retraining programs." D. "Through trial and error."