An economy in which output has decreased and prices have increased would suggest that there has been a:
A. negative demand side shock.
B. negative supply side shock.
C. positive demand side shock.
D. positive supply side shock.
Answer: B
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If prices rise within a country, then, other things equal, the value of a unit of domestic currency will:
a. rise in both the domestic and the foreign exchange markets. b. fall in both the domestic and the foreign exchange markets. c. rise in the domestic market and fall in the foreign exchange market. d. fall in the domestic market and rise in the foreign exchange market. e. fluctuate unpredictably in both domestic and foreign exchange markets.
If a family earned an additional $6,000 and, as a consequence, sustained a reduction of $3,600 in government benefits, the implicit marginal tax rate for this family would be
a. zero. b. 45 percent. c. 60 percent. d. 75 percent.
Total cost is comprised of __________.
Fill in the blank(s) with the appropriate word(s).
When people make decisions on the basis of the face value of currency rather than the real value, their decisions reflect
A. The wealth effect of inflation. B. The income effect of inflation. C. Money illusion. D. The price effect of inflation.