The most desirable inflation rate is the rate that
A. Maximizes the "wealth effect" of inflation.
B. Has the least effect on the behavior of companies, investors, consumers, and workers.
C. Coincides with an unemployment rate of 0 percent.
D. Equals the official goal of 3 percent.
Answer: B
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The local symphony recently raised its price for tickets to their summer concerts in the park. At the end of the summer season, the symphony was surprised to see that total revenue had actually decreased. The reason was that the elasticity of demand for tickets was
A. unit elastic. B. inelastic. C. elastic. D. Not enough information is given.
Cashing out capital gains in Virtual Currency System #3 (i.e., turning virtual capital gains into real world currencies) causes the nation's:
a. Monetary base to rise. b. M2 money supply to fall. c. M2 money multiplier to fall. d. Monetary base to remain the same.
Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that
A. removal of the tariff would cause domestic output to fall even further and the price to fall to consumers. B. the tariff had been imposed to counteract dumping and had been successful. C. removal of the tariff would actually cause domestic output to increase and price to fall. D. the tariff had been imposed to protect an infant industry and that the industry still needed protection.
Before the policy was put into effect, estimated consumer surplus (in thousands of dollars) was valued at
A collaborative federal and state program has been proposed in response to acid rain damagein Newport Bay, Maryland. To estimate the incremental benefits of the program, you use thetravel cost methodbasedupon the following pre- and post-policy recreational demand functions: Pre-policy: P = 62 – 0.02V1 Post-policy: P = 80 – 0.02V2, where V is the number of visitors (in thousands) and P is the admission fee. Assume the admission fee is set at $20 per visitor. a. 2,100 b. 44,100 c. 90,000 d. 45,900