If inflation falls from 11% to 5%, there is deflation
Indicate whether the statement is true or false
FALSE
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Which of the following statements is correct? I. When economists derive the aggregate demand curve, they are looking at the effect of the price level on one commodity only. II. Any non-price-level change that increases aggregate spending on domestic goods shifts the AD curve to the right.
A) I only B) II only C) Both I and II D) Neither I nor II
Why are too few resources devoted to the creation of knowledge?
a) Profit-seeking firms tend to free-ride on the knowledge that others have developed. b) Profit-seeking firms undervalue knowledge in their pursuit of revenues. c) Profit-seeking firms tend to rely on existing employee knowledge. d) Profit-seeking firms abuse their patents.
In a recession, monetarists believe
A. Interest rates rise to eliminate the recession. B. Velocity varies in response to fiscal policy. C. Marginal tax rates will automatically decrease. D. Fiscal policy is ineffective.
Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 1?
A. $20.4 billion B. $21.2 billion C. $20.8 billion D. $20 billion