Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation.
B. low economic growth and high inflation.
C. high economic growth and low inflation.
D. low economic growth and low inflation.
Answer: B
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Consumption spending will ________ when disposable income ________
A) increase; decreases B) decrease; increases C) change unpredictably; decreases D) increase; increases
The purchasing power parity theory is a good predictor of
a. all of the following b. the long-run tendencies between changes in the price level and the exchange rate of two countries c. interest rate differentials between two countries when there are strong barriers preventing trade between the two countries d. how intervention in exchange markets by central banks influences prices in various countries e. the day-to-day relationship between changes in the price level and the exchange rate of two countries
Suppose there are two firms maintaining a cartel agreement. If one firm suddenly drops its price, the other firm could interpret this as signaling:
A. underpricing. B. limit pricing. C. cartel pricing. D. cooperative pricing.
Without economic growth
A. we would have a non-zero-sum economy. B. the production possibility curve would shift outward. C. standards of living would rise only as the population increased. D. we would have a zero-sum economy.