Answered: The multiplier model assumes that the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Select correct and explain the choice for these 4 questions

The multiplier model assumes that the price level is:

fixed.
neither rigidly fixed nor perfectly flexible.
flexible in the short run but fixed in the long run.
perfectly flexible.

The multiplier model assumes that the:

short-run aggregate supply curve is horizontal.
short-run aggregate supply curve is vertical.
long-run aggregate supply curve is horizontal.
long-run aggregate supply curve is vertical

Inflation hurts:

everyone.
those whose incomes don't change.
those whose incomes can change.
no one.

Social security payments have been adjusted for inflation annually since the late 1970s yet it is sometimes argued that the true cost of living for retirees on social security rises less than the cost of living adjustment used by the government. If this is the case, retirees:

are hurt by inflation even with the government's inflation adjustment.
are protected from inflation by the government's inflation adjustment.
benefit from using the government's cost of living adjustment rather than a more accurate cost of living adjustment.
would be better off if the government cost of living adjustment more accurately reflected the true cost of living for retirees.

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