The PPP theory fails in reality for all of the following reasons EXCEPT
A) transport costs.
B) monopolistic or oligopolistic practices in goods markets.
C) the inflation data reported in different countries are based on different commodity baskets.
D) restrictions on trade.
E) inflation rates are unrelated to money supply growth.
E
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Why might most people, as in the United States, save less than is good for themselves and for the economy as a whole? How might policymakers encourage more saving?
What will be an ideal response?
Which of the following would cause a short-run decrease in the quantity supplied of personal computers?
A) The price of CPUs decreases. B) The price of software decreases. C) The number of PC manufacturers decreases. D) The cost of manufacturing PCs decreases.
Liquidity preference refers to
A) Keynes' name for the demand for money. B) the "random walk" behavior of consumption spending. C) monetarists explanations for stagflation. D) real business cycle theorists' explanations for stagflation. E) the controversy sparked by the Lucas critique.