The typical family on the Planet Econ consumes 10 pizzas, 7 pairs of jeans, and 20 gallons of milk. In 2016, pizzas cost $10 each, jeans cost $40 per pair, and milk cost $3 per gallon. In 2017, the price of pizzas went down to $8 each, while the prices of jeans and milk remained the same. Between 2016 and 2017, a typical family's cost of living:
A. remained the same.
B. decreased by 20 percent.
C. increased by 4.5 percent.
D. decreased by 4.5 percent.
Answer: D
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As more firms are attracted to an industry, the supply curve can be expected to shift to the right.
Answer the following statement true (T) or false (F)
The demand for money rises. According to the Keynesian transmission mechanism, the interest rate __________, investment spending __________ (assuming it is interest-sensitive), the AD curve shifts to the __________ and if the AS curve is horizontal, Real GDP __________
A) rises; falls; left; rises B) falls; rises; right; does not change C) rises; falls; right; rises D) falls; falls; left; does not change E) rises; falls; left; falls
If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP
A) equals B) is greater than C) is less than D) may be greater than or less than
Inflation can reduce the true cost of debt, and policymakers lower interest rates to encourage borrowing. Is it a good idea then to always take advantage of lower interest rates to borrow and rely on inflation to reduce the cost of debt and to increase your ability to repay the loan?
What will be an ideal response?