Refer to the information provided in Figure 6.2 below to answer the question(s) that follow.
Figure 6.2Refer to Figure 6.2. Along budget constraint AC, the opportunity cost of one beer is
A. 1/4 of a gardenburger.
B. 1 gardenburger.
C. 2 gardenburgers.
D. changing as Mr. Lingle moves down his budget constraint.
Answer: B
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If workers believe that government policymakers will increase aggregate demand to avoid a politically unpopular increase in unemployment when workers demand higher wages, then workers will not fear higher unemployment and their wage demands will
result in A) demand-pull inflation. B) hyperinflation. C) deflation. D) cost-push inflation.
Constant cost industries: a. use large portions of the total supply of specialized resources
b. significantly increase the demand for inputs when expanding output, and as a result, input prices rise. c. do not use inputs in sufficient quantities that a change in industry output would affect the prices of the inputs. d. are those in which the cost curves of individual firms shift upwards as industry output expands.
Consider the following ratio: the average annual inflation rate/the average annual money growth rate. A country with a ratio less than one would have:
A. to have a high unemployment rate. B. an economy suffering from a recession. C. an average inflation rate less than the average rate of money growth. D. an average inflation rate greater than the average rate of money growth.
To close a recessionary gap using fiscal policy, the government can _____
Fill in the blank(s) with the appropriate word(s).