If the cost of food & beverages increases by 10 percent, then, other things the same, the CPI is likely to increase by about
a. 1.5 percent.
b. 7.5 percent.
c. 10 percent.
d. 20 percent.
a
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Refer to Figure 17-2. Suppose the Fed used expansionary policy to push short-run equilibrium to point B. If the short-run equilibrium remained at point B long enough,
A) the economy would move back to point A. B) the short-run Phillips curve would shift down. C) the economy would stay at point B in the long run. D) the short-run Phillips curve would shift up.
Productivity is the amount of output produced by a unit of input.
Answer the following statement true (T) or false (F)
One complication in the process of reducing inflation by creating recessions is that the price level
A. adjusts more quickly to recessionary gaps than to inflationary gaps. B. does not apply as it does in inflationary gaps. C. always rises. D. rarely falls.
Higher rates of inflation reduce planned spending because:
A. the Fed reacts to the higher inflation by lowering interest rates. B. resources are redistributed from low-spending households to high-spending households. C. the real value of money increases. D. the reduction in wealth, resulting from the reduced real value of money, restricts spending.