Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing:
A. accelerating inflation.
B. deflation.
C. disinflation.
D. a constant rate of inflation.
C. disinflation.
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If you know the cross elasticity between two goods is negative, then you know the goods are
A) substitutes. B) normal goods. C) complements. D) inferior goods. E) inelastic goods.
If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost
A) the marginal benefit will rise and the marginal cost will fall as further reductions are made. B) private businesses, rather the consumers, should be made to pay for the cost of further reductions. C) further reductions will make society better off. D) economic efficiency will be achieved when emissions are reduced to zero.
If labor costs rise at the same time that the federal government decreases its purchases, in the short run
A) aggregate output and the price level will both increase. B) aggregate output will increase, but the price level will fall. C) aggregate output and the price level will both fall. D) aggregate output will fall, but the price level may either increase or decrease.
If banks faced a 100 percent reserve requirement, a $10,000 addition to banking reserves would increase the money supply by:
a. $100
b. $1,000.
c. $10,000.
d. $100,000.