Why is inflation is undesirable


Questions:

1) Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information you can conclude that

2) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to:

3) In which of the following industries are economies of scale exhausted at relatively low levels of output?

4) The average cost curves (AVC and ATC) should be minimized

5) If the wage rate increases,

6) The real wage will rise if the nominal wage

7) Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to

8) Paying an above-equilibrium wage rate might reduce unit labor costs by

9) A good real-world example of monopolistic competition is

10) An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called

11) Price is constant or given to the individual firm selling in a purely competitive market because

12) The most important pricing strategy for a perfectly competitive firm is

13) Which of the following is a nonprice barrier of entry?

14) A third-degree price discrimination can be applied to which of the following market structures?

15) Investing in R&D is more likely to occur in markets where

16) All economies of scale are achieved at the minimum of

17) Inflation is undesirable because it

18) An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the

19) Suppose productivity rises in a particular economy, but wages stay the same. Other things equal,

20) If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium

21) Expansionary fiscal policy is so named because it

22) Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should

23) GDP understates the value of output produced by an economy because it

24) Other things equal, a decrease in the real interest rate will

25) Other things equal, a decrease in corporate income taxes will

26) Inflation in U.S. prices will cause

27) The quantity theory of money states that

28) Suppose that U.S. prices rise 4% over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?

29) A rise in the domestic interest rate leads to capital

30) A firm under monopolistic competition will earn

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Microeconomics: Why is inflation is undesirable
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