Question
Why are economists concerned about inflation?
Inflation lowers the standard of living for people whose income does not increase as fast as the price level
Real GDP is necessarily falling when there is inflation
Inflation generally causes unemployment rates to rise
Inflation increases the value of peoples’ saving and encourages overspending on goods and services
Question
Two major virtues of the market system are that it:
results in an equitable personal distribution of income and always maintains full employment
results in price level stability and a fair personal distribution of income
allocates resources efficiently and allows economic freedom
eliminates discrimination and minimizes environmental pollution
Question
Suppose you have a limited money income and you are purchasing products A and B, whose prices happen to be the same. To maximize your utility, you should purchase A and B in such amounts that:
the income and substitution effects associated with each are equal
their marginal and total utilities are proportionate
their total utilities are the same
their marginal utilities are the same
Question
Macroeconomics approaches the study of economics from the viewpoint of:
governmental units
the entire economy
individual firms
the operation of specific product and resource markets
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