Explain how globalization impacts inflation in both the short run and the long run.
What will be an ideal response?
The impact of globalization on economic activity and inflation is similar to that of productivity enhancing technological progress. Just as advances in technology increase potential output, globalization shifts both the short-run and long-run aggregate supply curves to the right along the dynamic aggregate demand curve to a point where output is higher and inflation is lower. In the long run, output will return to potential output, but like any other positive supply shock, globalization offers monetary policymakers the opportunity to reduce inflation permanently.
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A) 0 B) 16.58 C) 56.12 D) 90.14 E) none of the above
As interest rates ________, a firm would have to pay more now to purchase the same number of future dollars.
A. rise B. remain unchanged C. fall D. Interest rates have no bearing on the payment for future dollars.
An import quota is
A) a quantity restriction. B) a price ceiling. C) a price floor. D) something imposed on agricultural goods grown by American farmers.
A sole proprietor has limited liability and cannot be forced to pay its creditors from his/her personal resources
Indicate whether the statement is true or false