In 1929, the CPI equaled 0.171 and in 1930, the CPI equaled 0.167. These data provide evidence of a period of:
A. inflation.
B. trade deficit.
C. deflation.
D. expansion.
Answer: C
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Rational expectations are the theory according to which people optimally use all the information they have, including information about government policies, when forecasting the future.
Answer the following statement true (T) or false (F)
The opportunity cost of something is the nominal price paid for the product
Indicate whether the statement is true or false
Movements along the demand curve are called changes in
a. demand b. opportunity costs c. quantity demanded d. the substitution effect e. preferences
A decrease in the price level in an economy will _____
a. increase the real value of dollar-denominated assets b. shift the aggregate expenditure line downward c. decrease the equilibrium level of output demanded d. cause an upward movement along the aggregate demand curve e. shift the aggregate demand curve leftward