A budget deficit will be most inflationary if the aggregate
A. demand curve is very steep.
B. demand curve is very flat.
C. supply curve is very flat.
D. supply curve is very steep.
Answer: D
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If an exhaustible resource is priced at marginal cost that remains constant over time, then
A) all owners of that resource earn rent. B) the price will stay constant over time. C) the percent price increase each year equals the rate of interest. D) the good is relatively scarce.
If the measured elasticity of supply coefficient equals 1.3, then supply is: a. perfectly elastic. b. elastic
c. unit elastic. d. inelastic.
A cost of living adjustment (COLA)
a. changes wages by the same percentage every year. b. decreases wages by the inflation rate. c. increases wages by the inflation rate. d. changes prices of consumer goods by the inflation rate.
How are economic abstractions similar to economic assumptions?
a. They both deal with specifics. b. They both simplify. c. They both reflect the real world precisely. d. They both involve detailed facts.