Deflation occurs when
A) there is a sustained increase in the price level.
B) there is a one-time increase in the price level.
C) there is a decline in the price level.
D) there is a decrease in the expected rate of inflation.
Answer: C
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The above figure shows the demand and cost curves for a firm. The figure shows a
A) monopolistically competitive firm in the long run. B) perfectly competitive firm earning zero profit. C) monopolistically competitive firm in the short run. D) perfectly competitive firm in the short run.
When a good is taxed, the tax burden a. falls disproportionately on the side of the market that is more elastic
b. falls disproportionately on the side of the market that is more inelastic. c. falls disproportionately on the side of the market that is closer to unit elastic. d. is not impacted by the relative elasticities of supply and demand.
A lower quantity demanded of a good reflects, ceteris paribus,
A. A downward shift of the supply curve. B. A higher price of the good. C. Fewer units actually purchased. D. Lower income.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline