Which of the following is true of inflation?
a. It is an increase in the general price level of goods and services.
b. The purchasing power of money increases as the result of inflation.
c. Inflation is similar to interest payments on future money income, such as pensions and receipts from outstanding loans.
d. Inflation has no effect on real resources.
A
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An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a
A) legal monopoly. B) natural monopoly. C) single-price monopoly. D) one-firm monopoly.
In the two-period model with asymmetric information, a bank
A) creates money. B) keeps money safely. C) multiplies reserves. D) borrows and lends.
In order to change the money supply, the Fed might use all of the following tools except:
A. discount window. B. reserve requirement. C. open market operations. D. deficit spending.
In a competitive market the current price is $5 . The typical firm in the market has ATC = $5.50 and AVC = $5.15
a. In the short run firms will shut down, and in the long run firms will leave the market. b. In the short run firms will continue to operate, but in the long run firms will leave the market. c. New firms will likely enter this market to capture any remaining economic profits. d. The firm will earn zero profits in both the short run and long run.