The greater the inflation rate, the
A. better it is to put money into savings accounts.
B. slower the decrease in the purchasing power of money.
C. faster the decrease in the purchasing power of money.
D. better it is to hold money as cash.
Answer: C
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Under which of the following conditions will a change in government purchases have the greatest effect on the economy in the short run?
a. The aggregate demand curve is relatively flat. b. The aggregate demand curve is relatively steep. c. The short-run aggregate supply curve is relatively flat. d. The aggregate demand curve is vertical. e. The short-run aggregate supply curve is vertical.
Suppose that you are planning to buy a new cellphone. Your choice is a new Samsung phone or HTC model. Samsung phones are manufactured in Korea and HTC phones are manufactured in Taiwan. Assuming that the price of each phone is the same, will your purchase of the Samsung or the HTC affect U.S. GDP differently? a. No, both have the same impact: your purchase will increase consumption expenditures
and decrease net exports by the same amount. b. Yes. This depends upon which cellphone carrier you choose. c. No, because Samsung's production only affects Korea's GDP; and HTC's production only impacts Taiwan's GDP. d. Yes. The country from which a product is imported has different effects on U.S. GDP because it depends upon trade agreements with the countries.
The U.S. government does not allow toggle switches for power windows in automobiles. The National Highway Traffic Safety Administration found that the regulation will save about two children every three years and have negligible costs because the industry will have plenty of time to incorporate new switches into future vehicles. Evaluating this rule in terms of costs and benefits, an economist most likely would conclude that:
A. it is a bad decision because the chances of a child dying (less than one per year) are so small that they can be ignored. B. we cannot tell if it is a good decision without knowing the ages of the children who might be saved by the regulation. C. it fails because it should take effect immediately, not after four years. D. it is a good decision because the benefits exceed the costs.
If the firm were a perfect competitor in the long run, how much would its output be?
