Economists fear deflation because:
A. falling revenue increases the likelihood that workers will be laid off.
B. falling prices make firms more susceptible to bankruptcy.
C. consumers anticipating further price declines will delay purchases.
D. of all these reasons.
Answer: D
You might also like to view...
If the public switches from using cash for most transactions to using checks instead, then all else equal, the money supply will:
A. not change. B. decrease. C. either increase or decrease. D. increase.
An example of a question that might be explored in microeconomics is to determine
A) the number of workers employed by Intel. B) savings by the household sector. C) why the U.S. economy has grown more rapidly than the Japanese economy. D) the total employment within the U.S. economy.
Answer the following statements true (T) or false (F)
1. If a firm cannot make a profit under conditions of perfect competition, it should shut down as soon as possible. 2. Allocative efficiency occurs when firms are producing the goods consumers most want and consumers pay a price equal to marginal cost. 3. Consumer surplus is the area above the demand curve and below the equilibrium price. 4. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.
In an unregulated, competitive market producer surplus exists because some
A) consumers are willing to pay more than the equilibrium price. B) producers are willing to take more than the equilibrium price. C) producers are willing to sell at less than the equilibrium price. D) consumers are willing to purchase, but only at prices below equilibrium price.