The ECB's focus on restraining inflation is, in large part, a result of:
A) Europe's experience with inflation during the 1960s.
B) Germany's experience with hyperinflation during the period between the first and second world wars.
C) the ECB's distrust of some of its smaller member countries (e.g., Finland, Portugal).
D) its monetary policy having no effect on economic growth.
Answer: B) Germany's experience with hyperinflation during the period between the first and second world wars.
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Suppose when the price of movie tickets is $7.50, the quantity demanded is 550, and when the price is $8.50, the quantity demanded is 450. Using the mid-point method, the price elasticity of demand is:
A. 0.625 B. 0.625 C. 1.6 D. 1.6
The effect of an increase in investment on real GDP will be greater, the larger the:
a. MPC. b. APC. c. MPS. d. APS.
Use the data in the following table for a private closed economy to answer the next question. All figures are in billions of dollars.Domestic Output or Income (RGDP = DI)Consumption$540$540560555580570600585620600640615660630The MPC and multiplier are, respectively,
A. 0.75 and 1.33. B. 0.80 and 1.25. C. 0.80 and 5. D. 0.75 and 4.