A true cost-of-living adjustment (COLA) in response to a change in prices would compensate consumers so that they would be able to
A) purchase the same bundle they purchased before prices changed.
B) achieve the same level of utility they did before prices changed.
C) face the same choices they did before prices changed.
D) achieve an increase in utility that is equal to the rate of inflation.
B
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Hyperinflation refers to a period of extremely erratic inflation rates
a. True b. False Indicate whether the statement is true or false
The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long run is sometimes called the
A. non-adjustment period. B. planning horizon. C. foreseeable future. D. minimum efficient time period.
For every $100 in assets, a bank has $40 in interest-rate sensitive assets, and the other $60 in non-interest-rate sensitive assets. The same bank has $50 for every $100 in liabilities in interest-rate sensitive liabilities, the other $50 are in liabilities that are not interest-rate sensitive. If the interest rate on assets increases from 5 to 6 percent, and the interest rate on liabilities increases from 3 to 4 percent, the impact on the bank's profits per $100 of assets will be:
A. a decrease of $0.10. B. a reduction of $1.00. C. an increase of $0.10. D. zero since the interest rates on assets and liabilities increased by the same amount.
At full employment, actual ________ equals ________
A) real GDP; potential GDP B) real GDP; nominal GDP C) unemployment; zero D) potential GDP; nominal GDP E) nominal GDP; potential GDP