Why did farmers in the late 1800s dislike deflation?
Most had large nominal debts. The decrease in the price level meant that they received less for what they produced and so made it harder to pay off the debts whose real value rose as prices fell.
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Explain why a voluntary production quota is difficult to operate
What will be an ideal response?
Production efficiency exists when the least cost combination of inputs is used to produce output
a. True b. False
A downward shift in the consumption function can be caused by:
a. expectations of higher inflation. b. an increase in wealth. c. a lower price level. d. none of these.
Differences in interest rates for different type of loans are due to:
A. the length of time the borrower has to repay the loan. B. the amount of the loan. C. government policy. D. exchange rate