When the average price level of a country actually falls, this is known as _____
a. inflation
b. deflation
c. hyperinflation
d. cost-push inflation
b
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A reserve requirement set by the Federal Reserve is the:
A. minimum amount of currency banks must hold in their vaults. B. maximum amount of currency banks are allowed to hold in their vaults. C. minimum ratio of reserves to bank deposits that commercial banks are allowed to maintain. D. maximum ratio of reserves to bank deposits that commercial banks are allowed to maintain.
If a competitive firm’s short-run average cost curve lies above the price of the product, we can conclude that the firm
A. is earning a huge profit. B. is incurring losses. C. is earning zero economic profits. D. is earning a normal profit.
How does an increase in the savings rate affect the multiplier in an economy, if at all?
a) The multiplier would turn from positive to negative. b) The multiplier would stay the same. c) The multiplier would increase. d) The multiplier would decrease.
Which of the following is an assumption used by Classical economists?
A. Wages adjust upward but not downward. B. Wages are inflexible. C. Wages adjust downward but not upward. D. Wages adjust both upward and downward.