The "core rate" of inflation
A. removes food and energy from the price index.
B. is a price index associated with the important things people buy.
C. adds in food and energy to the price index.
D. only includes the price of food and energy in the price index.
Answer: A
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Suppose a firm in a perfectly competitive market is operating at its profit-maximizing level of output. Will the firm suspend operations if it faces a reduction in the price it can charge for its product?
a. No, because it can always raise its prices in the short run. b. No, because it can always raise its prices in the long run. c. No, as long as the firm earns sufficient revenue to pay all of the variable costs. d. Yes, since it never makes sense to operate at a loss, even in the short run. e. No, because it always makes sense to operate at a loss, even in the long run.
In the long run, if the prices of goods and services paid by consumers increase the long-run aggregate:
A. supply will decrease. B. supply will stay the same. C. supply will increase. D. demand will increase.
When "stagflation" occurs
A. the economy experiences higher inflation rates and higher unemployment rates at the same time. B. the economy experiences lower inflation rates and lower unemployment rates at the same time. C. the economy experiences higher inflation rates and lower unemployment rates at the same time. D. the economy experiences lower inflation rates and higher unemployment rates at the same time.
From Table 2.3, at the price of $1, there is a 
A. shortage of 5. B. shortage of 4. C. surplus of 4. D. neither a shortage nor a surplus.