Suppose the economy is producing at the natural rate of output. A decrease in consumer and business confidence will cause ________ in real GDP in the long run and ________ in inflation in the long run, everything else held constant
A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease
D
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Commodity money can best be described as
A) money used to purchase agricultural products B) a good used as money that also has value independent of its use as money C) standardized goods like gold that trade in a financial market D) the form of money used in a barter system
When existing firms in a competitive market are profitable, an incentive exists for
a. new firms to seek government subsidies that would allow them to enter the market. b. new firms to enter the market, even without government subsidies. c. existing firms to raise prices. d. existing firms to increase production.
Which of the following statements is consistent with the theory of liquidity preference?
What will be an ideal response?
Which of the following measures gives the earliest warning of increasing inflation?
A. the Producer Price Index B. the Personal Consumption Expenditure Index C. the Consumer Price Index D. All of these should signal the same short-run inflation.