Many central banks around the world target an inflation rate of about ________, because of upward bias in measured inflation and to reduce the risk of deflation
A) -2%.
B) 0%.
C) 2%.
D) 5%.
C
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The key difference between supply in the short run and supply in the long run is that we assume that firms:
A. will have a total supply that is constant in the long run. B. are able to enter and exit the market in the long run. C. are able to enter and exit the market in the short run. D. will not collude in the short run.
What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?
a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous.
An economy operating to the left of its LRAS is operating ______.
a. inside its production possibilities curve b. outside its production possibilities curve c. on its production possibilities curve d. without a production possibilities curve
When comparing market and public sector decision making, which statement is NOT true?
A) Self-interest is the motivating force in each decision making arena. B) In both decision making sectors, majority rule is how things are done. C) In both decision making sectors, there are scarcity constraints. D) Collective (political) outcomes and economic outcomes may differ.