Answer True or False in the space provided Inflation typically falls in recession and increases in good times. The GDP deflator is a price index which fixes quantities in the base year. ________ The CPI typically shows a higher rate of inflation than the GDP deflator. ________ If the GDP deflator were 150 in 2022 and goes up to 160 in 2023, the inflation rate calculated in 2023 would be 10 percent. ________ One problem with the GDP deflator is that it neglects the substitution effect. ________ The real interest rate is the nominal interest rate divided by a price index. ________ Unexpected inflation will benefit banks and other lenders. ________ Falling prices automatically benefit all sectors of an economy. ________ Sudden and unexpected deflation is more likely to be harmful to economic growth than sudden and unexpected inflation. ________ 10. Prices of goods and services which are labor-intensive tend to be sticky prices of goods that are raw materials intensive tend to be flexible. ___________
Answer True or False in the space provided Inflation typically falls in recession and increases in good times. The GDP deflator is a price index which fixes quantities in the base year. ________ The CPI typically shows a higher rate of inflation than the GDP deflator. ________ If the GDP deflator were 150 in 2022 and goes up to 160 in 2023, the inflation rate calculated in 2023 would be 10 percent. ________ One problem with the GDP deflator is that it neglects the substitution effect. ________ The real interest rate is the nominal interest rate divided by a price index. ________ Unexpected inflation will benefit banks and other lenders. ________ Falling prices automatically benefit all sectors of an economy. ________ Sudden and unexpected deflation is more likely to be harmful to economic growth than sudden and unexpected inflation. ________ 10. Prices of goods and services which are labor-intensive tend to be sticky prices of goods that are raw materials intensive tend to be flexible. ___________
Chapter17: Inflation
Section: Chapter Questions
Problem 5SQ
Related questions
Question
Answer True or False in the space provided
- Inflation typically falls in recession and increases in good times.
- The
GDP deflator is aprice index which fixes quantities in the base year. ________ - The
CPI typically shows a higher rate of inflation than the GDP deflator. ________ - If the GDP deflator were 150 in 2022 and goes up to 160 in 2023, the inflation rate calculated in 2023 would be 10 percent. ________
- One problem with the GDP deflator is that it neglects the substitution effect. ________
- The real interest rate is the nominal interest rate divided by a price index. ________
- Unexpected inflation will benefit banks and other lenders. ________
- Falling prices automatically benefit all sectors of an economy. ________
- Sudden and unexpected deflation is more likely to be harmful to
economic growth than sudden and unexpected inflation. ________
10. Prices of goods and services which are labor-intensive tend to be sticky prices of goods that are raw materials intensive tend to be flexible. ___________
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