What is the main problem with mild inflation, according to some economists?
A. It increases frictional and structural unemployment in the economy.
B. It reduces the size of the GDP gap.
C. It diverts productive time towards activities to hedge against inflation.
D. It leads to unanticipated deflation.
Answer: C
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A firm in perfect competition and one in monopolistic competition are very similar in that MR = P for firms in both markets.
Answer the following statement true (T) or false (F)
The cross-price elasticity of demand for peanut butter with respect to the price of jelly is -0.3. If we expect the price of jelly to decline by 15%, what is the expected change in the quantity demanded for peanut butter?
A) +15% B) +45% C) +4.5% D) -4.5%
A fall in interest rates leads to:
a. an increase in the rental rate on a machine. b. a decrease in the rental rate on a machine. c. no change in the rental rate on a machine. d. a fall in the marginal productivity of capital.
Suppose Melita is willing to pay a maximum of $30 for a pair of normal sunglasses and $36 for the same pair with a double UV-protection filter. If the unit cost of upgrading a product is $6, the seller will upgrade the product if Melita pays at least $35 for it
Indicate whether the statement is true or false