Which of the following functions are performed by changes in relative prices but not by changes in average prices?
A. Computing real income from nominal income.
B. Indicating an overheating economy.
C. Measuring the rates of inflation.
D. Signaling changes in the desired mix of output.
Answer: D
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According to the economics of exhaustible resources, if the interest rate increases,
A) an exhaustible resource will be used up sooner. B) an exhaustible resource will be used up over a longer period of time. C) the period of time until an exhaustible resource is used up will not change. D) none of the above
Within the aggregate demand-aggregate supply framework, monetarists argue that a change in aggregate:
A. Demand will have a large effect on the price level, but a temporary effect on output B. Demand will have a small effect on the price level, but a permanent effect on output C. Demand will have a large effect on the price level and a large effect on output D. Supply will have a large effect on the price level, but a temporary effect on output