Money illusion occurs
A. when we disregard inflation adjustments for dollar values.
B. when prices decrease.
C. when money disappears.
D. at a magic show.
Answer: A
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In the circular flow model, firms sell the services of factors of production to households
Indicate whether the statement is true or false
The inefficiency of a sales tax on a good is ultimately the result of the
A) low tax revenue earned by the government relative to the cost of collection. B) wedge between what buyers pay for the good and what sellers receive for the good. C) buyers being unable to avoid paying the tax. D) sellers being unable to avoid paying the tax. E) increase in the consumer surplus that is more than offset by the decrease in the producer surplus.
At the competitive equilibrium:
A) the demand curve is tangential to the supply curve. B) the quantity demanded exceeds the quantity supplied of a good. C) the quantity supplied exceeds the quantity demanded of a good. D) the quantity demanded is equal to the quantity supplied of a good.
If the nominal gross domestic product (GDP) is $6 trillion for a particular year, and the real GDP is $3 trillion, then the GDP price index is 167
a. True b. False Indicate whether the statement is true or false