question
what is inflation
answer
increase in price level over time
question
what do we start with to calculate inflation
answer
price of several goods and services
question
what equation is used to calculate the rate of inflation from year 1 to 2
answer
price in year 2-price in year 1/price in year 1
question
year 1 has a price level of 100, and year 2 has a price level of 125, what is the rate of inflation
answer
25%
question
as an index number increases over time that means inflation is occurring
answer
true
question
a fixed basket of goods tends to _____ the rate of inflation because of the ____
answer
understate; substitution bias and quality bias
question
what happens when a basket of goods evolves
answer
the calculation becomes more complex
question
what happens when a price level increases at extremely high levels
answer
hyperinflation
question
Can GDP in one year be compared to GDP in a later year?
answer
yes after inflation is factored out
question
Zakistan GDP in year 1 is $5000000 and $60000000 in year 2, we can say that....
answer
there is a greater number of goods and services being produced in the economy in year 2
question
a negative real interest rate shows there has been....
answer
a decrease in buyer lending power
question
who benefits from unexpectedly high inflation rates
answer
those with student loans
question
what happens to labor markets experiencing unemployment as inflation occurs
answer
real wages start to fall and cause equilibrium
question
what is the best balance of trade
answer
it depends
question
a negative current account balance means
answer
payments are flowing out and financial capital is flowing in
question
a negative current account balance indicates a trade deficit
answer
true
question
what is the largest factor of US current account balance
answer
goods
question
what is true about national savings and investment identity
answer
financial capital supplied must equal financial capital demanded
question
equation for national savings and investment identity
answer
S+(M-X)=I+(G-T)
question
what supplies financial capital
answer
domestic savings
question
what demands financial capital
answer
domestic investment
question
if a trade deficit decreases what cannot happen on its own
answer
an increase in government borrowing
question
a trade deficit gets smaller as a recession occurs in an economy
answer
true
question
savings= $1000
investment=$3000
trade deficit=$1000
what is true about government
investment=$3000
trade deficit=$1000
what is true about government
answer
government savings is $1000
question
when is a trade deficit helpful for a country
answer
when extra foreign investment is used on something to promote future economic growth
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
