How can an economy achieve full employment without igniting inflation?
What will be an ideal response?
An increase in aggregate demand will help an economy achieve full employment, but it also has the effect of increasing the price level and contributing to inflation. That inflation effect can be mitigated by an increase in aggregate supply that tends to dampen the rising inflation. The U.S. economy experienced such conditions from 1996 to 2000.
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Suppose a Russian economist told you that since the fall of communism, the Russian income distribution has shifted to perfect inequality, you would know then (no need to calculate), that the Russian Gini coefficient is
a. 1 b. 0 c. 10 d. -1 e. infinite
If consumer tastes for electric cars increase over the next 10 years, we will see an increase in the demand for electric cars, higher electric car prices, and an increase in the equilibrium quantity of electric cars.
a. true b. false
If an increase in disposable income causes consumption to increase from $4,000 to $10,000 and causes saving to increase from $2,000 to $4,000, it can be inferred that the MPC equals
A. 0.5. B. 0.75. C. 0.4. D. 0.6.
Protectionism
A) is the use of cheap labor to protect firms from paying high wages. B) is the use of trade barriers to protect domestic firms from foreign competition. C) refers to reductions in tariffs and other barriers that protect consumers from paying high prices. D) refers to the use of copyright and trademark laws to protect inventors and artists from losing the rights to their creative efforts.