When will a decrease in aggregate demand not result in a lower inflation rate in the short run?
What will be an ideal response?
A decrease in aggregate demand will not result in a lower inflation rate in the short run if there is no change in the price level as a result of the decrease in aggregate demand. If, for example, aggregate supply decreases and potential GDP decreases at the same time that aggregate demand is decreasing, the inflation rate may remain unchanged.
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A shoe salesman working on commission must decide whether to work hard or shirk. Working hard would increase the probability of a sale from 20% to 70% but would cost him $5 . If the average price of shoes is $100, what is the minimum commission rate would induce him to work hard?
a. 4% b. 6% c. 8% d. 10%
The U.S. government bonds are likely to be less risky because:
a. the government always runs a balanced budget. b. the government bonds are backed by gold. c. the government can raise taxes to redeem the bonds at maturity. d. the government has limited liability to repay. e. the government always has an excess reserve of foreign exchange.
If the GDP of Macroland is $250,000,000 and they have a population of 5,000 people, then the GDP per capita is:
A. $1,250,000. B. $50,000. C. $5,000. D. quite high.
Scientific investigations that have no immediately obvious commercial applications are called nonessential research.
Answer the following statement true (T) or false (F)