Monetarists believe that the aggregate supply curve is relatively steep in the short and long runs. This means they expect
A. inflation with no change in output.
B. increases in output to bring much inflation.
C. increases in output to bring little inflation.
D. decreases in output to bring much inflation.
Answer: B
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An unstable inflation rate
a. always redistributes real income from lenders to borrowers. b. always redistributes real income from borrowers to lenders. c. adds to the risk of borrowing and lending and interferes with long-run financial planning. d. makes goods and services too expensive. e. always redistributes real income from taxpayers to the government.
A new Mexican restaurant opened in the town of Manchester. The residents of the town are
a. happy because of the product-variety externality, while other restaurant owners are unhappy because of the business-stealing externality. b. happy because of the business-stealing externality, while other restaurant owners are unhappy because of the product-variety externality. c. unhappy because of the product-variety externality, while other restaurant owners are happy because of the business-stealing externality. d. unhappy because of the business-stealing externality, while other restaurant owners are happy because of the product-variety externality.