Describe the major costs of inflation, being sure to distinguish between anticipated and unanticipated inflation
What will be an ideal response?
Costs of anticipated inflation include an erosion of the value of currency, which leads to shoe-leather costs, and the costs of changing prices. Costs of unanticipated inflation arise because unanticipated inflation transfers wealth between people and because it disturbs the role of prices as signals in the economy.
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Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________
A) market value; 30 units B) a market basket; 30 units C) market value; $120 D) real value; $120 E) a price index; $120
What is the substitution effect of a wage increase? What is the income effect of a wage increase? Explain under what conditions the labor supply curve will be upward sloping and when it will be downward sloping
What will be an ideal response?