Describe the social costs of hyperinflation.
What will be an ideal response?
Hyperinflation occurs when a country experiences inflation of over 100 percent each year. This has huge distortionary effects. Individuals will take more time seeking out the lowest prices of goods and services. The purchasing power of the currency will fall unexpectedly. Since the currency price will be unknown, this may force individuals to abandon the currency altogether. In terms of the loanable funds market, the actual inflation rate will exceed the expected inflation rate, making lenders worse off. Due to price volatility, it may cause the loanable funds market to cease entirely.
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Which of the following will cause the demand curve for a good to shift to the left?
a. an increase in the price of the good b. a decrease in the price of the good c. a decrease in the price of a complementary good d. an expectation of a future price decline e. an increase in the price of a substitute good
Between 1975 and 2011, the wage gap between women with a high school education and women with a college education increased. In particular, in 2011 women with a college degree earned about
a. 12% more than women with a high school education. b. 26% more than women with a high school education. c. 70% more than women with a high school education. d. 81% more than women with a high school education.
An input is indivisible if:
A. it cannot be increased to produce a larger quantity of output. B. it cannot be used as a substitute for other inputs in the production process. C. it is sufficiently inexpensive to purchase that firms will want to buy as much as they can. D. it cannot be scaled down to produce a smaller quantity of output.
Which of the following categories accounted for the third largest percentage of total federal government expenditures?
a. Education and health. b. National defense. c. Income security. d. Interest on the national debt.