Which of the following events may lead to deflation? A. decrease in government spending during a rapid expansion B. decrease in government spending during a severe contraction C. increase in government spending during a very deep trough D. increase in the rate of government hiring at the peak of a cycle

Q: 3. If nominal GDP increases then real GDP increases. A Always if inflation is positive B Never is…

A: Real GDP is nominal GDP adjusted for inflation.  If inflation is positive, increase in nominal GDP…

Q: 12. An economy has the following data: Current Unemployment Rate = 3.5%; Current Inflation Rate…

A: Real GDP is the inflation adjusted measure of the value of all goods and services produced in an…

Q: If the inflation rate turns out to be greater than was is expected to be, the clear winners are…

A: The inflation rate is a measure that quantifies the percentage increase in the general price level…

Q: The lowest part of a recession is referred to as its _________. a. Depression b. Boom c. Trough d.…

A: The state of economy when there is significant decline in the activities of the nation is referred…

Q: If labor supply decreases, what will happen to the real wage rate, employment, and real output,…

A: Labour supply refers to the amount of time and effort that individuals are willing and able to…

Q: Question: If the government has a target to lower the inflation target; then how the government can…

A: A central banking strategy known as inflation targeting involves modifying monetary policy to attain…

Q: Governments critically analyze the impact of increasing minimum wages. Increasing wages is a risky…

A: The persistent increment in the price level in the economy is termed as the inflation. The inflation…

Q: QUESTION 22 If the price level is falling, the economy is experiencing a.…

A: If the price level is falling,there is deflation.

Q: Question 27 The Missing Deflation Puzzle applies to what period? The Dot-Com Recession. The…

A: Answer: The missing deflation puzzle applies to the great recession period of 2008. During that…

Q: Match the term to the definition: The sustained rise in the average price level over a period of…

A: A business cycle describes the changes or fluctuations in the economic activity of an economy that…

Q: Phase in which employment rises, and production and income increase. 1-depression 2- expansion 3-…

A: There are some phases of business cycle to define an economic conditions. Such phases include…

Q: 5. The Aggregate Demand Curve is downward sloping due to A. the impact on inflation on the…

A: Since you have posted multiple questions. will be answering only for first one.

Q: 12. Inflation a. Decreases everyone's nominal income. b. Decreases everyone's real income. c.…

A: Inflation means increase in average price level of goods and services. Nominal income is not…

Q: When there is a recessionary gap: a. Employment exceeds full employment. b. Employment equals full…

A: Gross domestic product is the value of final goods and services produced in the economy within a…

Q: A10  Philip Cross: The government is driving inflation 1. Fiscal stimulus 2. Passing the costs on to…

A: When there is a rise in the interest rate then it makes borrowing expensive. This discourages…

Q: An economic expansion rather than a recession Occurs A. When the unemployment rate is not changing.…

A: Answer - Economic expansion - Economic expansion is the growth in the economic  of country , it is…

Q: Bob cannot find a job because he does not have the required skills.

A: Lack of required skill will leads to jobless.

Q: D. the grocery industry 2. The difference between a recession and a depression is: A. a recession is…

A: The distinction between a recession and a depression lies in the severity and duration of economic…

Q: - With the country in a recession, you are to draw up a plan on how to stimulate the economy. You…

A: Equilibrium level of real GDP (Y) = $ 7.5 trillion Equilibrium CPI = 165 MPC = 0.8 Fall in real GDP…

Q: When a recessionary gap exists, actual output______ potential output and the rate of inflation will…

A: A recessionary gap, or contractionary gap, happens when a country's genuine GDP is lower than its…

Q: The following are causes of inflation EXCEPT: a. Money Supply b. Demand c. Rising income d.…

A: Since you have posted multiple questions as per the guidelines we can solve only first question per…

Q: 1.     You deposit $5000 in the bank for one year. CASE 1: inflation = 0%, nom. interest rate = 20%…

A: a. Case 1. Real interest rate = Nominal Interest rate - Inflation                 Real interest rate…

Q: 14. Which of these government actions is designed to lower inflation? E. hiring more government…

A: Inflation is the general rise in the prices of all goods and services which leads to decrease in…

Q: If interest rates are high in the country, this will result into ___________. a. a decrease on the…

A: Interest rates and inflation rates tend to be inversely proportional. The economy expands and…

Q: * Question 10 The government is concerned that the high inflation rate is threatening the…

A: Government can undertake the below fiscal measures to reduce the inflation rate 1. Increase taxes -…

Q: Last year the Carter family earned $50 000. This year their income is $52 000. In an economy with an…

A: The income for the family would be the total amount of money which would be earned by the family.…

Q: a. First, give the definition of the "inflation rate" and "GDP deflator Second, explain the…

A: Under macroeconomics, the entire workings of the economy as well as the impact of various aggregates…

Q: . Employment b. Laying off c. Maturity of Investment d. Promotion

A: There are many cases where spending will increase. Spending is dependent on several factors such as…

Q: Which of the following are true  1. Inflation squeezes profits. 2. Firms raise prices to offset…

A: Answer is given below

Q: Туа System to that of the United States. Suppose someone in Robinya bought a parcel of land for…

A: The nominal value of any data of economics means that the economic value is estimated in terms of…

Q: On a business cycle diagram, the trough represents: a. An expansionary phase b. A contractionary…

A: Business cycle: A business cycle is a graphical presentation of the coordinated cyclical upswings…

Q: 18. Keynesian Economics: a. supports the theory that deficit spending can be used to stimulate the…

A: 18. Keynesian Economics is a macroeconomic theory, which is advocated that the government deficit…

Q: 2. During recessions, output a and unemployment both fall b. and unemployment both rise c. rises,…

A: 2) Recession refers to a massive decrease in economic activities, which is usually caused by…

Q: If there is persistent inflation Select one: a. long-run aggregate supply is constant. b. there is…

A: The rate at which the general level of prices for goods and services in an economy rises, leading to…

Q: Suppose the tax rate on interest income is 50 percent, the real interest rate is 3 percent, and the…

A: Cost-push inflation (also known as wage-push inflation) occurs when overall prices increase…

Q: In the short run, there is a positive relationship between   A. inflation and unemployment   B.…

A: In economics, the term short run usually refers to a comparatively short time span during which…

Q: A falling price level is called as   a.  disinflation.   b.  deflation.   c.  a…

A: In economics, price refers to the market value of a good or service as it is the amount of money…

Q: Inflation is known as a because it

A: Inflation means an increase in the general price level of goods and services in an economy during a…

Q: a government is facing high inflation, then it will take an action as following:   I. increase…

A: Answer: Correct option: 1 (increase taxes, increase discount rate) Explanation: Inflation refers to…

Q: When an economy is operating in a positive output gap (Inflationary Gap) which of the following must…

A: An inflationary gap is where potential GDP is less than the actual real GDP in the economy.

Q: How has the real federal minimum wage rate changed? The real federal minimum wage rate _____. A.…

A: When talking about the real federal minimum wage rate, it can be said that it is the minimum level…

Q: When the real wage decline, it must be the case that  a. Nominal wage is declining b. Real wage is…

A: Wage: - In economics wage is the factor income or monetary reward received for the supply of labor.

Q: If the government enacts an expansionary policy during a time of full employment, ______.   A.…

A: Long run aggregate supply (LRAS) curve demonstrates the full employment level of output (or natural…

Q: What is likely to be true at the trough of the business cycle? A. Real GDP, unemployment, and…

A: Trough of te business cycle: The lowest point in an economic cycle, representing a period of…

Q: The housing market has weakened during every recession except which of the following?   a. The…

A: We have to find The housing market has weakened during every recession except which of the…

Q: Initially, demand-pull inflation will OA. increase the price level and increase real GDP. B. shift…

A: Demand pull inflation means inflation caused by the demand factors ( where demand curve shifts to…

Q: 6. Taylor just received a 3% pay increase but the current rate of inflation is 4%. We can say that…

A: The objective of the question is to understand the concept of real wage and how it is affected by…

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.