As of 2014, the average household earned $53,657. In 1979, the average household earned $16,461. Although it appears as though incomes have more than tripled, other prices have risen too. This illustrates a concept known as
A. disinflation.
B. COLA.
C. deflation.
D. money illusion.
Answer: D
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As the U.S. economy recovers from the recession of 2007-2009, stubbornly high unemployment is a concern. For each of the three business cycle models, identify the appropriate policy regime
What will be an ideal response?
Suppose that the opportunity cost of producing goods differs between two nations. We can correctly state that
A) the two nations should not specialize in the production of goods. B) specialization can lead to an increase in the production of all goods. C) specialization can lead to an increase in the consumption of all goods. D) neither country has a comparative advantage in the production of any good.
In the U.S., people are required to pay taxes on
a. nominal interest earnings, irrespective of their real interest earnings. b. real interest earnings, irrespective of their nominal interest earnings. c. real capital gains, irrespective of their nominal capital gains. d. All of the above are correct.
The figure below shows an IS-LM-FE model for an economy with fixed exchange rates. Initially the economy was at Point A, a triple intersection. Here, the FE curve is flatter than the LM curve.
At Point B, the economy is experiencing
A. a decreasing money supply. B. a high rate of unemployment. C. a surplus in the overall balance of payments. D. an overall balance of payments that is in equilibrium.