Why do suppliers hoard their goods during periods of high inflation?
What will be an ideal response?
Ans: During periods of high inflation, suppliers prefer to hold onto goods that store their value, rather than holding onto cash, which quickly loses its value.
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Because a monopolistically competitive firm has some market power, in the long-run the price of its product exceeds its
a. average revenue. b. average total cost. c. marginal cost. d. None of the above is correct.
Which of the following would not be included in the calculation of accounting profit?
A. The rent paid by the owner for the use of a building. B. The medical insurance coverage for the company's workers. C. The salary the owner could have earned working elsewhere. D. The wages paid to the company's workers.
In an open economy, an increase in capital inflows ________ the equilibrium domestic real interest rate and ________ the quantity of domestic investment.
A. increases; decreases B. increases; increases C. decreases; decreases D. decreases; increases
The time-inconsistency problem with monetary policy tells us that, if policymakers use discretionary policy, there is a higher probability that the ________ will be higher, compared to policy makers following a behavior rule
A) inflation rate B) unemployment rate C) interest rate D) foreign exchange rate