Suppose that the consumer price index at year-end 2004 was 140 and by year-end 2005 had risen to 150. What was the inflation rate during 2005?
What will be an ideal response?
7.1 percent
Inflation = (new PI - old PI)/ (old PI)
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In an open economy, if domestic citizens decide to save more, then the domestic real interest rate will ________ and the level of capital investment in the country will ________, holding other factors constant.
A. decrease; increase B. increase; increase C. increase; decrease D. decrease; decrease
Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff
What will be an ideal response?
In a perfectly competitive resource market the labor supply curve facing the single firm is
A) vertical. B) horizontal. C) downward-sloping. D) upward-sloping.
Which of the following is true of an expansionary gap? a. It develops when the expected price level exceeds the actual price level
b. In the long run, this gap will close when resource suppliers negotiate lower resource payments. c. It measures the amount by which actual output falls short of the economy's potential. d. In the long run, this gap will close when the short-run aggregate supply curve shifts rightward. e. In the long run, this gap will close when resource suppliers negotiate higher resource payments.