Define "stagflation" and explain how it can be created
What will be an ideal response?
Stagflation is a combination of two words: stagnation and inflation. Stagnation means real GDP is below the full employment level and falling, that is, the economy is in recession while at the same time the price level is rising, that is, the economy is experiencing inflation. An increase in the price of a major resource that decreases aggregate supply can trigger stagflation.
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The consumer price index for a country in Year 1 was 129 and in Year 2, it was 133. The inflation rate of the country between the two years is approximately ________
A) 6 percent B) 2.2 percent C) 4 percent D) 3.1 percent
Any point inside a production possibilities curve indicates that the economy is using all its available resources and technology
Indicate whether the statement is true or false
The burden of unemployment is
A. endured better by people with substantial savings. B. fully measured by the monetary cost computed in the GDP gap. C. borne equally by all unemployed people. D. completely offset by the federal unemployment insurance program.
Which of the following statements about education and wage rates is true?
A. People who are high school graduates with no college education have seen substantial increases in inflation-adjusted earnings in the last 30 years. B. People with four-year college degrees tend to earn considerably more than those with advanced degrees. C. While people with high school degrees have had almost no increase in real wages in 30 years, those with advanced degrees have had significant increases in pay. D. Inflation-adjusted earnings for people with four-year college degrees have fallen over the last 30 years.