If workers expect inflation, and tend to overestimate actual inflation when they negotiate wage increases, the result will be a continuing
A. shift of AD to the left.
B. shift of AD to the right.
C. recessionary gap.
D. inflationary gap.
Answer: C
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The intertemporal budget constraint is defined as:
A) DP + DF/(1 + r) = QP + QF/(1 + r) B) V = QP + QF/(1 + r) C) V = DP + DF/(1 + r) D) DF + DP/(1 + r) = QF + QP/(1 + r) E) DP + DF(1 + r) = QP + QF(1 + r)
In explaining the downward-sloping aggregate demand curve, the real money-supply effect is:
a. When the price index falls, the real money supply falls, causing the real risk-free interest rate to fall, and consumption and real investment to rise. b. When the price index falls, the real money supply falls, causing the real risk-free interest rate to fall, and consumption and real investment to rise. c. When the price index falls, the real money supply rises, causing the real risk-free interest rate to fall, and consumption and real investment to rise. d. When the price index falls, central banks intervene to bring the money supply back to where it was, causing the real risk-free interest rate to fall, and consumption and real investment to rise. e. None of the above.
A good that people must actually consume before they can determine qualities is called
A) a credence good. B) a search good. C) an experience good. D) a persuasive good.
When cash or coins are initially deposited into a bank,
A. The composition of the money supply changes, but the size of the money supply does not change. B. Neither the composition nor the size of the money supply changes. C. Both the composition and the size of the money supply change. D. The composition of the money supply does not change, but the size of the money supply does change.