The tendency for inflation to change relatively slowly from year to year in industrial countries is called:
A. potential inflation.
B. inflation inertia.
C. inflation expectations.
D. the inflation gap.
Answer: B
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Suppose that the basket of goods purchased by the typical consumer costs $188.80 this year and it cost $160 in the base year. The CPI this year would be
A) 28.8. B) 85.11. C) 118.0. D) 348.8.
An increase in the money wage rate
A) increases the long-run aggregate supply. B) decreases the long-run aggregate supply. C) increases the short-run aggregate supply. D) decreases the short-run aggregate supply.
The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by
A) Adam Smith. B) David Hume. C) David Ricardo. D) Eli Heckscher. E) Lerner and Samuelson.
Under perfect capital mobility and flexible exchange rates, monetary policy works through the
a. interest rate. b. exchange rate. c. exports. d. Both b and c e. None of the above