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1.Which of the components of GDP must increase if we are to experience greater rates of
2.Explain the difference between cost-push inflation and demand-pull inflation.
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- For a given real interest rate, a decrease in the inflation rate would a. increase the after-tax real interest rate and so decrease saving. b. decrease the after-tax real interest rate and so decrease saving. c. decrease the after-tax real interest rate and so increase saving. d. increase the after-tax real interest rate and so increase saving.How can an economy experience economic growth with no inflation? An economy can experience economic growth with no inflation if _______. A. it does not engage in international trade B. the government has a balanced budget C. aggregate demand increases at the same pace as potential GDP D. aggregate demand increases at a faster rate than potential GDP4. If the nominal interest rate is fixed over the life of a loan, the consequences of inflation being higher than expected are that A. the real interest rate will be higher than expected, and the lender will benefit. B. the real interest rate will be lower than expected, and the lender will benefit. C. the real interest rate will be lower than expected, and the borrower will benefit. D. the real interest rate will be higher than expected, and the borrower will benefit. E. the real interest rate will remain unchanged over the life of the loan, and the lender will benefit at the expense of the borrower. 5. Under what circumstance would the nominal interest rate be positíve but the real interest rate be negative? A. Expected inflation is negative. B. Expected inflation is zero. C. Expected inflation is exactly equal to the nominal interest rate. D. Expected inflation is greater than the nominal interest rate.
- If nominal wage growth is greater than the sum of change in labor productivity less inflation, does this mean the wage share is growing, rising, or staying the same? Thus, what does this mean for the profit share?37. What type of inflation is caused by an increase in the purchasing power of people? a.Cost push b.Chronic c.Built in d.Demand pull"Everyone is hurt by inflation." That statement is: A. Correct B. Incorrect because a price increase to one person is higher income to another C. Incorrect because people buy the same bundle of goods D. Incorrect because this statement concerns real income and not nominal income
- q22- If there is inflation Select one: a. production is rising but prices are held constant b. the CPI is falling c. real GDP grows faster than nominal GDP d. nominal GDP grows faster than real GDP1. The CPI is more commonly used as a gauge of inflation than the GDP deflator is because the a. CPI is easier to measure. b. CPI includes more goods and services that the GDP deflator does. c. CPI better reflects the goods and services bought by consumers. d. GDP deflator cannot be used to gauge inflation. 2. If Year 1 is the base year and Year 2 is the following year, then the inflation rate in Year 2 equals a. [(CPI in Year 2 – CPI in Year 1)/CPI in Year 1] x 100. b. [(CPI in Year 2 - CPI in Year 1)/CPI in Year 2] × 100. c. [(CPI in Year 1- CPI in Year 2)/CPI in Year 1] x 100. d. [(CPI in Year 1- CPI in Year 2)/CPI in Year 2] x 100. 3. Given that Clara's income exceeds her expenditures, Clara is best described as a a. saver or as a supplier of funds. b. borrower or as a demander of funds. c. saver or as a demander of funds. d. borrower or as a supplier of funds. 4. Long-term bonds are a. riskier than short-term bonds, and so interest rates on long-term bonds are usually lower than…What is likely to be true at the peak of the business cycle? A. Real GDP, unemployment, and inflation are all likely to increase. B. Real GDP is increasing, unemployment is decreasing, and inflation is increasing. C. Real GDP, unemployment, and inflation are all likely to decrease. D. Real GDP is decreasing, unemployment is increasing, and inflation is steady or decreasing.
- Business Fluctuations: End of Chapter Problem 10. Consider the following figure. In this relatively unsuccessful economy, the Solow growth rate is 1% per year. Inflation rate (TT) X LRAS SRAS (E[T] - 6%) AD (M+-15%) Solow growth rate (1%) AD (M+V-7%) Real GDP growth rate a. Calculate the value of X in this economy. b. If spending growth were 15% in this economy, what would the inflation rate be in the long run, assuming the Solow growth rate stays fixed? X= The inflation rate is %If economic growth occurs with demand increasing faster than supply, then Select one: a. Price level will decrease b. Price level will not change c. Price level will rise d. nominal wage will fallRising inflation is a biggest challenge for every economy. A sustainable economic growth need price stability which makes essential approach for consumption demand. Higher fluctuation in inflation rate is causing insufficient productivity in economy and consumption demand. Effective utilization of expansionary and contractionary economic policy make may make balance between economic growth, price stability, aggregate demand & supply and employment level. The main components of the consumer price index in Oman are Food, Beverages, Tobacco Transport, Communication, Rent, Electricity, Water and Fuel. Consumer prices in Oman rose by 1.59 percent year-on-year in April of 2021; it was the first monthly increase in consumer prices since March of 2020. The consumer prices in Oman decreased by 1.57 percent year-on-year in January of 2021, marking the eleventh consecutive month of declining in consumer price index which leads to economic slowdown. Major consumption expenditure in 2017 was…
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