Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 35, Problem 4CQQ
To determine
The exchange rate between Paris and New York.
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Students have asked these similar questions
If the economy is in long-term equilibrium and cost of energy for production increases, which of the following is likely to occur?
Select one:
a. It will lead to demand-pulled inflation and create an expansionary gap.
b. It will lead to demand-puled inflation and create a contractionary gap.
c. It will lead to cost-pushed inflation and create an expansionary gap.
d. It will lead to cost-pushed inflation and create a contractionary gap.
e. It will create hyperinflation in the economy, but will not create an economic gap.
You're a pricing analyst for a manufacturing firm. You are tasked with predicting how average prices will change over the next
quarter to help your manager decide how to change her prices.
How might you find the best estimate of the likely inflation rate?
For the best estimate,
obtain the average forecast of many economists.
look to the financial markets.
analyze surveys of people's inflation expectations.
rely on the forecast of an eminent economist.
A central bank pledges to reduce the inflation rate from 10% to 3%. People
reduce their inflation expectations to 5%, but the central bank reduces inflation
to 3%. What happens to the unemployment rate?
Chapter 35 Solutions
Principles of Economics (MindTap Course List)
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- The Phillips curve is A. a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed. B. a positive relationship in the long run between the rate of inflation and the rate of unemployment. C. a negative relationship between the inflation rate and the unemployment rate, at least in the short run. D. a positive relationship between the unemployment rate and the real Gross Domestic Product (GDP) level.arrow_forwardWhich of these is not a factor that causes demand-pull inflation? a. Private consumption b. Population c. Government spending d. Supply side shocksarrow_forwardExplain inflation. Is zero inflation good target?arrow_forward
- Does inflation impose costs on the economy? Explain the problems with anticipated inflation and unanticipated inflation.arrow_forwardExplain one harm associated with unexpected inflation that is not associated with expected inflation. Then explain one harm associated with both expected and unexpected inflation.arrow_forwardIn theory, inflation not only ______ the value of consumers' money over time, but it also increases the ____ of producers over time. a.Decreases, wages b.Increases, interest rates c.Decreases, unemployment d.Increases, real GDParrow_forward
- Which of the following describes a situation in which the person is hurt by inflation? Select one: a. a person paid a fixed income during an inflationary period b. a retiree whose pension is adjusted for inflation c. a person who borrows money during a period when inflation is under-predicted d. a person who lends money during a period when inflation is over-predictedarrow_forwardIn the long run, a. the natural rate of unemployment depends primarily on the level of aggregate demand. b. inflation depends primarily upon the money supply growth rate. c. there is a tradeoff between the inflation rate and the natural rate of unemployment. d. All of the above are correct.arrow_forwardAccording to the Phillips curve, the inflation rate depends on all of these EXCEPT: a. previously expected inflation. b. an exogenous supply shock. c. the real interest rate. d. the deviation of output from its natural rate.arrow_forward
- 1) Whether you gain or lose during a period of inflation depends on: a) how the price increases affect government purchases of goods. b) whether the economy is expanding or contracting. c) whether you save or not. d) whether your income rises faster or slower than prices of the things you buy. 2) A real wage that does not keep pace with inflation implies: a) a decrease in purchasing power. b) a decrease in nominal wages. c) a decrease in nominal wages after inflation. d) an increase in the inflation adjusted real wage.arrow_forwardThe two main types of inflation are demand-pull and labor slide. True or false?arrow_forwardSuppose the economy is operating at a point where output is less than the natural level of output. Which of the following statements is correct given this information? Select one: a. Workers will revise upwards price expectations. b. The inflation level will be higher next period than this period. c. The unemployment rate is less than the natural unemployment rate. d. The inflation level is less than the expected inflation level. e. None of the above.arrow_forward
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