If a product is a normal good, an increase in your income will
A) increase demand for the product.
B) decrease demand for the product.
C) increase supply of the product.
D) decrease supply of the product.
A
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When actual output is less than potential output, there is ________ output gap and the inflation rate will ________.
A. an expansionary; be lower than the expected rate of inflation B. a recessionary; exceed the expected rate of inflation C. a recessionary; be lower than the expected rate of inflation D. an expansionary; exceed the expected rate of inflation
In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?
A) Increase the available amount of resources. B) Increase the level of technology. C) Redistribute the existing resources to produce more apples and fewer oranges. D) First move to point B and then move to point F.
Suppose you need an estimate of future inflation (to decide, for example, whether a particular security is a good investment). How might you formulate a rational expectation?
What will be an ideal response?
The rationing function of prices means that
A) government is responsible for setting the prices of basic foods. B) all goods and services are produced by large firms. C) businesses determine what goods consumers should purchase. D) buyers and sellers synchronize their decisions through the price system.