Inflation is

Group of answer choices

An increase in relative prices of all goods and services.

A rise in the price of every good but not any service.

None of the Answers are Correct.

A situation in which purchasing power increases.

An increase in the average level of prices of goods and services.

Inflation means

Group of answer choices

Average prices are rising, but it is not certain what is happening to relative prices.

None of the Answers are Correct.

Both relative prices and average prices are rising.

Relative prices are rising, but it is not certain what is happening to average prices.

Specific prices are rising, and relative prices are falling.

Adecreasein the average level of prices of goods and services is

Group of answer choices

Recession.

None of the Answers are Correct.

Depression.

Deflation.

Inflation.

Relative price is

Group of answer choices

None of the Answers are Correct.

The amount of income a particular good requires.

The price of one good in comparison with the price of other goods.

A decrease in purchasing power because of rising prices.

The current price paid for a good or service.

Changes in relative prices may occur in a period of

Group of answer choices

Inflation only.

Stable prices only.

Stable prices, inflation, or deflation.

None of the Answers are Correct.

Deflation only.

Money illusion is the

Group of answer choices

Use of nominal dollars rather than real dollars to gauge income or wealth.

None of the Answers are Correct.

Uncertainty that occurs because of inflation.

Movement of taxpayers into higher tax brackets as nominal income increases.

Focus on real dollars rather than nominal dollars to determine purchasing power.

Which of the following results from unexpected increases in the rate of inflation?

Group of answer choices

None of the Answers are Correct.

Decreased uncertainty.

Redistributions of income and wealth between different groups.

Increased windfall profits to creditors who have lent large amounts of money.

Creditors are made better off.

A COLA is

Group of answer choices

A mortgage that adjusts the nominal interest rate to changing rates of inflation.

An automatic adjustment of nominal income to the rate of inflation.

A price index that refers to all goods and services included in GDP.

All of the Answers are True.

An inflation rate of at least 200 percent, lasting more than one year.

Hyperinflation is

Group of answer choices

None of the Answers are Correct.

The movement of taxpayers to higher tax brackets because of rising prices

An inflation rate in excess of 200 percent, lasting at least one year.

A common problem in the United States

An inflation rate in excess of 20 percent, lasting at least one year.

Which of the following wasNotcharacteristicof the U.S. economy during the Great Depression?

Group of answer choices

Unemployment reached 50 percent.

The stock market crashed.

Families lost their farms.

None of the Answers are Correct.

Automobile production fell

The study of aggregate economic activity for the economy as a whole is

Group of answer choices

Opportunity cost.

Scarcity.

Microeconomics.

None of the Answers are Correct.

Macroeconomics.

Alternating periods of economic growth and contraction in real GDP define

Group of answer choices

Macro equilibrium.

None of the Answers are Correct.

Say's Law.

The business cycle.

Capitalism.

According to the classical view, if consumer demand slowed down,

Group of answer choices

Wages would increase, and the economy would return to its long-term growth trend.

Prices would decrease, and the economy would return to its long-term growth trend.

Prices would increase, and the economy would return to its long-term growth trend.

Investment and government demand would increase, and the economy would return to its long-term growth trend.

Based on the classical view,

Group of answer choices

Cyclical unemployment might occur temporarily.

Unemployment never occurs.

All goods produced are always purchased at an unchanging price.

None of the Answers are Correct.

Persistent unemployment might be a problem.

According to classical economists, market-driven economies

Group of answer choices

Require government intervention

None of the Answers are Correct.

Are typically self-adjusting.

Are inherently unstable.

Are always in long-run equilibrium.

Say's Law states that

Group of answer choices

Supply creates its own demand.

Shifts of either supply or demand can achieve a given market equilibrium.

Wages and prices are inflexible, which prevents the achievement of market equilibrium.

Increased prices lead to increased supply.

None of the Answers are Correct.

Unlike the classical economists, Keynes asserted that

Group of answer choices

Prices and wages were flexible.

Markets would naturally self-adjust.

The economy was inherently unstable.

None of the Answers are Correct

Laissez faire policies would lead to macro equilibrium.

A decline in total real output for two or more consecutive quarters is referred to as

Group of answer choices

None of the answers are correct.

A growth recession.

A recession.

Laissez faire.

Say's Law.

Fiscal policy is the use of

Group of answer choices

Tax incentives, deregulation, and other mechanisms to increase the ability and willingness to produce goods and services.

Money and credit controls to alter macroeconomic outcomes.

Trade policy to alter macroeconomic outcomes.

None of the answers are correct.

Government spending and taxes to alter macroeconomic outcomes.

Aggregate demand is the total quantity of output

Group of answer choices

Demanded if the economy is in equilibrium.

Consumers actually buy.

All of the Answers are Correct

Demanded at alternative price levels in a given time period.

Producers are willing and able to supply at alternative price levels.

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply is the definition of

Group of answer choices

Disposable income.

None of the Answers are Correct.

Real expenditures.Disposable income.

Macro equilibrium.

Full-employment GDP.

According toKeynesian theory, which of the following isnottrueat eachshort-term macro equilibrium?

Group of answer choices

The economy may or may not be at full employment.

None of the Answers are Correct.

All macroeconomic goals are achieved.

Producers are selling everything they currently produce.

The aggregate demand curve intersects the aggregate supply curve.

The components of aggregate demand are

Group of answer choices

None of the Answers are Correct.

Consumption, government spending, net exports, and investment.

Exports, imports, investment, and disposable income.

Consumption, exports, imports, and disposable income.

Consumption, inventory, government spending, and disposable income.

The marginal propensity to consume can be found by dividing

Group of answer choices

Total consumption by the number of people consuming.

The change in dis-propensity income by the change in disposable income.

Disposable income by total consumption.

The change in total consumption by the change in disposable income.

Total consumption by total saving.

The MPC + MPS must always equal

Group of answer choices

The slope of the consumption function

0.

None of the Answers are Correct.

The APC.

1.

If, in the aggregate, consumers spend 75 cents of every extra dollar received, then the

Group of answer choices

MPS is 0.25.

APC is 0.75.

APC is 1.25.

MPS is 0.75.

MPC is 0.75.

If wealth rises,

Group of answer choices

There will be a movement to the left along the AD curve. (No Shift)

There will be a movement to the right along the AD curve. (No Shift)

The AD curve will shift to the right.

The AD curve will shift to the left.

None of the Answers are Correct.

If the availability of credit increases, then

Group of answer choices

There will be a movement to the right along the AD curve

The AD curve will shift to the left.

There will be a movement to the left along the AD curve.

The AD curve will shift to the right.

The AD Curve will Remain The Same (No Change / Shift or Movement)

When aggregate expenditures fall below the full-employment level of output, which of the following types of unemployment is most likely to increase?

Group of answer choices

Cyclical.

Structural.

Trans-Seasonal

Seasonal.

Frictional.