A Korean steel company produces steel in the United States, with some of its steel being exported to other nations and some of it being sold within the United States. If the prices of this steel increase, then
a. the GDP deflator and the CPI will both increase.
b. the GDP deflator will increase and the CPI will be unchanged.
c. the GDP deflator will be unchanged and the CPI will increase.
d. the GDP deflator and the CPI will both be unchanged.
a
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Refer to the above figure. Suppose the economy is in equilibrium at point A. If rational expectations exist, an increase in aggregate demand caused by an anticipated increase in the money supply will cause the economy to
A) stay at point A. B) move to point B. C) move to point C. D) move to point D.
According to the adaptive expectations theory, after many years of rising prices, people tend to ignore past experience in predicting the future rate of inflation
a. True b. False Indicate whether the statement is true or false