True and False WRITE FULL WORDS ONLY 1 Fixed income receivers are hurt by inflat

Question

True and False WRITE FULL WORDS ONLY 1 Fixed income receivers are hurt by inflation. 2 Investment is the most volatile component in the measurement of GDP. 3 Production of durable goods is affected more in the downturn of business cycles. 4 Increase in wages and other resource prices cause demand- pull inflation. 5 Greater the MPC, smaller is the size of multiplier. Fill- in- the -blanks: Extra Credit statements (two points each, but both parts should be correct) 1. Ratchet effect states that prices arc flexible but inflexible 2 Invests the largest % of GDP in the world. 3. During 1950 - 2009; prices increased times and decreased Times 4. In the business cycle; the highest point is the And lowest point is the 5. The immediate short run AS curve is While the long run AS curve is 6. The two types of inflation are demand- And cost- 7. GDP gap is the difference between -

Explanation / Answer

True , because inflation reduces their real earnings .

True , change in investment is induced by government spending and GDP .

True , with downfall of business cycle there is a fall in durable goods

False , it causes demand push inflation

True , m = 1/1-MPC if MPC is going to be larger

Ratchet effect states that prices are flexible in short run but inflexible in long run

Business cycle highest is the peak and lowest is recession

As curve is upward sloping in short run , vertical in the long run

inflation are either demand pull or cost push .

Gdp gap is the gap between actual and potential gdp

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