In the long run the inflation rate equals the level implied by:
A. aggregate demand.
B. the exchange rate.
C. the rate of money growth.
D. fiscal policy.
Answer: C
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Sam quits his job as an airline pilot and opens his own pilot training school. He was earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning 6 percent interest and uses the money in his new business. He uses a building he owns as a hangar that he could have rented out for $5,000 per year. He rents a computer for $1,200, buys office supplies for $500, rents an
airplane for $6,000 . pays $1,300 for fuel and maintenance, and hires one worker for $30,000 . Sam's total revenue from pilot training classes equaled $90,400 . Sam's implicit costs for this year are equal to a. $84,400 b. $39,000 c. $55,000 d. $45,600 e. $40,000
Which of the following nations experienced average rates of economic growth of less than 2 percent over the last 100 years or so?
a. Bangladesh b. Pakistan c. United Kingdom d. All of the above are correct.
Lower rates of inflation increase planned spending because:
A. the Fed reacts to the lower inflation by lowering interest rates. B. resources are redistributed from high-spending households to low-spending households. C. the reduction in wealth, resulting from the reduced real value of money, restrains spending. D. the prices of domestic goods sold abroad increase (with a constant exchange rate).
An increase in demand for a good can be caused by
A. a reduction in income if the good is a normal good. B. an increase in price of a complementary good. C. a decrease in the price of a substitute good. D. a decrease in the price of a complementary good.