What is the crucial difference between inflation generated on the demand side versus inflation generated on the supply side?
A. Demand-side inflation is short-lived, while supply-side inflation lasts for a long time.
B. Demand-side inflation leads to budget surpluses, while supply-side inflation contributes to budget deficits.
C. Supply-side inflation is subject to the control of policymakers, while demand-side inflation is beyond their reach.
D. Demand-side inflation is normally accompanied by rising real GDP, while supply-side inflation may be accompanied by falling real GDP.
Answer: D
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Economies of scale arise from:
A. decreasing returns to scale. B. increasing returns to scale. C. constant returns to scale. D. constant marginal returns to scale.
Briefly define a tariff and a quota. Do any of these methods restrict trade without harming domestic consumers?
What will be an ideal response?
Comparing M1 and M2 we know that
A) M1 is larger because it contains currency. B) M2 is approximately equal to M1. C) M2 is larger because it contains M1 and other assets. D) M2 is larger because it contains more liquid assets than does M1.
An individual wanting the most liquid asset possible will hold
A) currency. B) a savings account. C) gold. D) U.S. government bonds.