Consider the game tree in Figure 12.8. If Store A and Store B make advertising decision independently:
A. both stores choose to advertise.
B. both stores choose not to advertise.
C. only Store A chooses to advertise.
D. only Store B chooses to advertise.
Answer: A
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Full employment describes the condition in which
a. 100 percent of the civilian labor force is employed. b. 95 to 96 percent of the civilian labor force is employed. c. there is no frictional unemployment. d. unemployment is 10 percent or less.
International trade under a floating exchange rate system
A. has been trouble-free owing to the stabilizing role of speculators in the currency markets. B. has suffered from so many problems that the volume of trade has declined significantly. C. exposes businesses to unavoidable risks when exchange rates change. D. has been subject to wild runs on currencies that were on the verge of devaluation.
Last year the Olsen family earned $70,000 . This year their income is $77,000 . In an economy with an inflation rate of 8 percent, we can conclude that the Olsen's nominal income:
a. and real income both increased. b. and real income both decreased. c. increased, but their real income decreased. d. decreased, but their real income increased.
In practice, the three measurements of inflation, the CPI, PPI, and GDP deflator:
A. all measure inflation, but focus on different parts of the economy. B. are all positively correlated. C. all closely track each other. D. All of these statements are true.