1.) Generally in the United States today, goods inflation a. under 5% is conside
ID: 2428787 • Letter: 1
Question
1.) Generally in the United States today, goods inflation
a. under 5% is considered acceptable.
b. under 2.5% is considered acceptable.
c. at zero is considered acceptable.
d. that is negative is preferable.
2.) The last time the United States experienced hyperinflation was:
a. during the oil crisis of the 1970s.
b. during World War II.
c. during the Civil War.
d. during the Great Depression.
3.) Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 2 percent and productivity increases 1 percent, one would predict inflation to be:
a. 0 percent
b. 1 percent
c. 1.5 percent.
d. 3 percent.
4.) Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 1 percent and productivity increases 2 percent, one would predict inflation to be:
a. -1 percent
b. 0 percent
c. 1.5 percent.
d. 3 percent.
5.) According to the quantity theory:
a. unemployment is everywhere and always a monetary phenomenon.
b. inflation is everywhere and always a monetary phenomenon.
c. the equation of exchange does not hold true.
d. real output is everywhere and always a monetary phenomenon.
6.) A reason that the quantity theory of money has lost favor is that:
a. money growth and inflation are no longer closely related.
b. the quantity of money is better at predicting stock prices.
c. the economy recently experienced an unexpected and deep recession.
d. the federal funds market has been taken over by the Federal Reserve bank.
7.) Which of the following remains constant along the short-run Phillips curve?
a. Unemployment
b. Inflationary expectations
c. Inflation
d. Output
Explanation / Answer
1. Generally in the United States today, goods inflation under 2.5% is considered acceptable. So the correct option is B.
2. The last time the United States experienced hyperinflation was during the oil crisis of the 1970s. So the correct option is A.
3. Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 2 percent and productivity increases 1 percent, one would predict inflation to be 1 percent. So the correct option is B.
4. Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 1 percent and productivity increases 2 percent, one would predict inflation to be -1 percent. So the correct option is A.
5. According to the quantity theory inflation is everywhere and always a monetary phenomenon. So the correct option is B.
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