Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 31.7, Problem 2QQ
To determine
Inflationary expenditure gap.
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"Inflation tax" means that:
Select one:
a. as the price level rises, taxpayers are pushed into higher tax brackets.
b. as the price level rises, the real value of money held by the public decreases.
c. as taxes increase, the rate of inflation also increases.
d. in a hyperinflation, the chief source of tax revenue is often the printing of money.
One of the fiscal measures of dealing with inflation is:
a.
Implement a budget surplus
b.
Operate a budget deficit
c.
Increase the rate of interest
d.
Operate a balance budget
A government with debt has an incentive to create inflation to eliminate some debt. Why might it not always do this?
I. The fisher effect
II. The government cannot create inflation
III. This may upset bond purchasers who are also voters
IV. Borrowers and lenders come to expect increases in inflation, which increases the nominal interest rate
III only
I, III, and IV
II and III only
All of these above
Chapter 31 Solutions
Economics (Irwin Economics)
Ch. 31.2 - Prob. 1QQCh. 31.2 - Prob. 2QQCh. 31.2 - Prob. 3QQCh. 31.2 - Prob. 4QQCh. 31.7 - Prob. 1QQCh. 31.7 - Prob. 2QQCh. 31.7 - Prob. 3QQCh. 31.7 - Prob. 4QQCh. 31 - Prob. 1DQCh. 31 - Prob. 2DQ
Ch. 31 - Prob. 3DQCh. 31 - Prob. 4DQCh. 31 - Prob. 5DQCh. 31 - Prob. 6DQCh. 31 - Prob. 7DQCh. 31 - Prob. 8DQCh. 31 - Prob. 1RQCh. 31 - Prob. 2RQCh. 31 - Prob. 3RQCh. 31 - Prob. 4RQCh. 31 - Prob. 5RQCh. 31 - Prob. 6RQCh. 31 - Prob. 7RQCh. 31 - Prob. 8RQCh. 31 - Prob. 9RQCh. 31 - Prob. 1PCh. 31 - Prob. 2PCh. 31 - Prob. 3PCh. 31 - Prob. 4PCh. 31 - Prob. 5PCh. 31 - Prob. 6PCh. 31 - Prob. 7PCh. 31 - Prob. 8PCh. 31 - Prob. 9PCh. 31 - Prob. 10P
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Similar questions
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- 1. Another economy has the production Y = A * K^0.5 * L^0.5, the marginal product MPL = 0.5 * A * K^0.5 / L^0.5, in which K = 144 and the supply of labor w = 5 * EP/P *L^0.5 Productivity is A=50. In absence of shocks and policies, EP/P=1, the number of jobs is L = 60, and wage is w = 38.73. But now inflation is slower than expected, with EP/P=1.2. Find the new equilibrium number of workers. 2. Find the new equilibrium wage at EP/P=1.2 3. Graph the change in the labor market equilibrium. Mark the before and after equilibria with E0 and E1. Label axes and curves, map relevant values onto axes. 4. Now let's consider this same scenario in terms of the accelerationist Phillips curve. The labor force is N=64. Find the rates of unemployment before and after as (N-L)/N and map them into our surprise inflation indexes, EP/P. Label the natural rate of unemployment, show the cyclical rate of unemployment.arrow_forward1. Another economy has the production Y = A * K^0.5 * L^0.5, the marginal product MPL = 0.5 * A * K^0.5 / L^0.5, in which K = 144 and the supply of labor w = 5 * EP/P *L^0.5 Productivity is A=50. In absence of shocks and policies, EP/P=1, the number of jobs is L = 60, and wage is w = 38.73. But now inflation is slower than expected, with EP/P=1.2. Find the new equilibrium number of workers. 2. Find the new equilibrium wage at EP/P=1.2 3. Graph the change in the labor market equilibrium. Mark the before and after equilibria with E0 and E1. Label axes and curves, map relevant values onto axes.arrow_forwardA significant rise in the price of oil causes: Question 3 options: a) demand-pull inflation b) deflation c) disinflation d) cost push inflationarrow_forward
- Define inflation. Explain why inflation is a macroeconomic concern. Question 2: How can the government utilize the instruments within a fiscal policy to stimulate economic activity in an economy experiencing a recession.arrow_forwardSchedule of the aggregate demand stipulated that ------ and inflation is connected with ------- output? Select one: a. higher, lower b. None c. lower, lower d. higher, higher e. zero, zeroarrow_forwardGovernments critically analyze the impact of increasing minimum wages. Increasing wages is a risky decision for an economy because this might cause ___________. a. Cost push b. Hyperinflation c. to bring low cost of production d. Built in inflationarrow_forward
- Demand-pull inflation Demand-pull inflation occurs when: A. input costs rise. B. unemployment is above the natural rate. C. people incorrectly forecast inflation. D. aggregate demand increases.arrow_forwardThe two main types of inflation are demand-pull and labor slide. True or false?arrow_forwardDistinguish between demand-pull inflation and cost-push inflation. Which of the two types is most likely to be associated with a negative GDP gap? Which with a positive GDP gap, in which actual GDP exceeds potential GDP?arrow_forward
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