How are demand-pull and cost-push inflation reflected in terms of the AD-AS model?
Demand-pull inflation is reflected as a rightward shift of the AD curve that expands real GDP but also increases the price level. Cost-push inflation is reflected as a leftward shift of the AS curve which drives the price level up.
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There is a general overall __________ relationship between the price level and ____________.
A. negative; aggregate expenditures B. positive; aggregate expenditures from the government C. negative; nominal expenditures from the government D. positive; nominal expenditures from households
Suppose a U.S.-made machine costs $500 and the exchange rate was 100 yen = $1 yesterday. Today the exchange rate is 90 yen = $1 . You know then that the
a. machine would now cost more dollars b. machine would now cost the Japanese firm less yen c. machine would now cost less dollars d. machine would now cost the Japanese firm more yen e. yen has depreciated in value
Free ridership is associated with what kind of externality, and why?
a. positive, because costs are identified but not internalized b. negative, because costs are identified but not internalized c. positive, because many who benefit are not always identified or accounted for d. negative, because many who benefit are not always identified or accounted for e. positive, because social value equals private value
If there are strong economies of scale and scope, then society
A. can benefit from regulation of a natural monopoly. B. can gain when more firms enter the market. C. can gain when regulators place a price floor on the market. D. should promote the expansion of federally run markets.