Is it possible for inflation and recession to occur simultaneously in an economy?
A) No, because prices cannot rise during a recession.
B) No, because recession is caused by too little demand and inflation by too much demand.
C) Yes, and this has happened several times in the U.S. economy since World War II.
D) Yes, but it has not occurred since the Great Depression in the 1930s.
E) Yes, but while it is logically possible it has never actually happened in any major industrialized economy.
C
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The Fed raises the federal funds rate. Which of the following changes occurs most rapidly?
A) Exchange rate rises. B) Consumption expenditure decreases. C) Aggregate demand decreases. D) Real GDP growth decreases. E) Inflation rate decreases.
Refer to Table 9-14. The real average hourly earnings for 1965 in 1982-1984 dollars equal
A) $1.28. B) $6.49. C) $8.28. D) $15.45.