One cost of a perfectly anticipated inflation is that it
A. increases menu costs.
B. transfers wealth from lenders to borrowers.
C. transfers wealth from borrowers to lenders.
D. damages the role of prices as signals in the economy.
Answer: A
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Cost-plus pricing
a. is used only in oligopolistic market structures b. simplifies pricing policy by adding a markup to average total cost c. in actual practice leads to markups which are greater for more elastic demand curves d. is likely to increase profits more than the use of marginal analysis e. requires the firm to project the amount which will be sold and then "mark-up" the price based on average variable cost
The two major trading partners of the United States are
a. Germany and Mexico b. Mexico and Canada c. Japan and Canada d. Canada and Brazil e. Brazil and Japan
To calculate GDP in 2000, you would subtract the value of goods exported in 2000
Indicate whether the statement is true or false
According to Friedman's permanent income hypothesis, which of the following statements about transitory income is true?
a. It reflects the unexpected gains of income are transitory income. b. It reflects the income of people who have temporary employment. c. People's consumption depends on transitory income. d. It reflects the income of retired people. e. Habitual losses (or gains) at gambling are transitory income.