When the economy is operating at potential GDP, the rate of inflation is
A. rising.
B. zero.
C. falling.
D. neither rising nor falling.
Answer: D
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If social returns to the production of a good are greater than private returns, then we can conclude that relative to the social optimum, the good will be
A) over produced and under priced. B) under produced and over priced. C) over produced and over priced. D) under produced and under priced. E) None of the above.
If the public believes that the commitment to a nominal anchor is not credible, the effect of a positive aggregate demand shock is for ________
A) short-run aggregate supply to shift down B) short-run aggregate supply to remain unchanged C) short-run aggregate supply to shift up D) inflation, but not economic activity, to increase
What is a cartel? Can cartels generate long-term profits without the existence of barriers to entry?
What will be an ideal response?
How are the prices of various goods and services determined for the Consumer Price Index (CPI)?
a. By an extensive annual household survey b. By an extensive monthly survey of stores, apartments, and owner-occupied homes c. By an extensive annual survey of stores, apartments, and owner-occupied homes d. By an extensive monthly household survey e. Through the same survey used to determine the typical market basket