Inflation is an economic problem because it
A) leads inevitably to unemployment.
B) makes prices less useful as signals for resource allocation.
C) leads to recession.
D) results in rapid increases in the money supply.
B
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Can the process of consumer choice as illustrated with a budget line/indifference curves approach explain the downward sloping demand curves that consumers have for goods, such as Pepsi?
What will be an ideal response?
Suppose that a monopolist must choose between two points on its demand curve: it can sell 100 units for $3 each, or it can sell 150 units for $2 each. Which of the following is true?
a. The monopolist is facing elastic demand. b. The monopolist is facing unit elastic demand. c. The monopolist is facing inelastic demand. d. The monopolist is facing perfectly elastic demand. e. The elasticity of demand cannot be determined with the information given.
Compared to a country with an MPC of 0.8, a country with an MPC of 0.6 would have to change government expenditures by ________ as much to have the same impact on real GDP.
A. twice B. three times C. four times D. five times
Answer the following questions true (T) or false (F)
1. Necessities tend to have more inelastic demand than luxuries. 2. When there are few substitutes available for a good, demand tends to be relatively inelastic. 3. If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.