Which of the following statements is false?
A. Inflation that is higher than expected benefits debtors, and inflation that is lower than expected benefits creditors.
B. When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy increases.
C. Whether you gain or lose during a period of inflation depends on whether your income rises faster or slower than the prices of the things you buy.
D. There are no costs or losses associated with anticipated inflation.
Answer: D
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Unlike dealers, brokers
A) deal in the primary market. B) deal in equity and not in debt. C) do not buy or sell for their own account. D) get most of their funds from consumer deposits.
Briefly explain how reductions in government purchases and tax decreases would influence aggregate demand through the multiplier effect. Give an example.
What will be an ideal response?
Suppose that price is below the minimum average total cost but above the minimum average variable cost. In the short run, a firm that is a price taker would:
A. immediately shut down and get out of the industry. B. continue to produce a quantity such that marginal revenue equals marginal cost. C. shut down temporarily, in hopes of restarting in the near future. D. cut price and expand output in hopes of achieving economies of scale
The term "rent seeking" best describes a situation in which:
A. individuals expend effort searching for a good price on an apartment. B. consumers compete for a limited quantity of the good. C. firms use resources to secure or preserve a monopoly in providing a good or service. D. None of these is a good description of rent-seeking behavior.