Stagflation is a situation of
A. high unemployment and high inflation.
B. high unemployment and low inflation.
C. low unemployment and low inflation.
D. low unemployment and high inflation.
Answer: A
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The 2007-2009 recession began with reductions in investment and consumption spending, precipitated by a financial crisis. This explanation for the recession is consistent with
A. the monetarist view of macroeconomic instability. B. the mainstream view of macroeconomic instability. C. the rational expectations view of macroeconomic instability. D. the real business cycle theory of macroeconomic instability.
According to the expectations hypothesis, if investors believed that, for a given holding period, the average of the expected future short-term yields was greater than the long-term yield for the holding period, they would act so as to drive:
A. down the price of the short-term bond and drive up the price of the long-term bond. B. up the prices of both the short- and long-term bonds. C. down the prices of both the short- and long-term bonds. D. up the price of the short-term bond and drive down the price of the long-term bond.
Refer to the graph shown. An effective price floor at $8 causes consumer surplus to:
A. fall from 62.50 to 10. B. increase from 120 to 130. C. fall from 320 to 80. D. increase from 10 to 62.50.
In many business situations one firm will act first, and then other firms will respond. To help analyze these types of situations economists use
A) follow-the-leader-games. B) sequential games. C) retaliation games. D) bargaining games.