In general we may note that inflation:
A. always increases purchasing power.
B. should try to be avoided at all costs.
C. doesn't necessarily harm purchasing power.
D. always decreases purchasing power.
Answer: C
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When the government imposes an $8 price ceiling on a good that would have had a $10 equilibrium price without the ceiling,
A. surpluses are created. B. supply will increase to meet the demand. C. excess demand occurs. D. quantity demanded of the good will fall.
_____ improves exchangeability, and reduces the cost of obtaining information about a good and about the parties involved in the transaction
a. De-integration b. Outsourcing c. Vertical integration d. Standardization
The assignment of inputs to specific industries by central planners is made difficult by
a. the interdependency among industries. b. lack of data for decision making. c. the danger of a chain reaction among industries if an error is made at any point. d. All of the above are correct.
When the required reserve ratio is changed,
A. the money multiplier is changed but the amount of excess reserves in the banking system is unchanged. B. the money multiplier is unchanged but the amount of excess reserves in the banking system is changed. C. the size of the money multiplier and the amount of excess reserves change in the opposite direction from the required reserve ratio. D. the size of the money multiplier and the amount of excess reserves change in the same direction as the required reserve ratio.