Cost pull inflation occurs when the:
A. price of a key input increases suddenly.
B. price level changes in response to changes in the business cycle.
C. price of necessity goods increases suddenly.
D. business cycle becomes sporadic and unpredictable.
A. price of a key input increases suddenly.
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Both the PIH and the LCH predict that
A) the sum of saving and consumer durable purchases should increase in relation to personal income in booms and fall in recessions. B) the sum of saving and consume nondurable purchases should increase in relation to personal income in booms and fall in recessions. C) the sum of saving and consumer durable purchases should decrease in relation to personal income in booms and increase in recessions. D) saving should increase in relation to personal income in booms and fall in recessions, but that consumer durables tend to behave in a more stable manner over a cycle.
Monopolistic competition is similar to perfect competition in that:
A. firms earn economic profits in the long run B. there are a large number of firms C. firms face downward-sloping demand curves D. both a and b E. all of the above
Suppose there is diminishing, but not negative, marginal utility and no inflation. If the price of labor goes up, a worker will supply more labor. (Hint: The worker measures his marginal costs in terms of hours worked.)
Answer the following statement true (T) or false (F)
Suppose there is a simultaneous fiscal expansion and monetary expansion. We know with certainty that
A) output will increase. B) output will decrease. C) the interest rate will increase. D) the interest rate will decrease. E) both output and the interest rate will increase.