(Consider This) Some economists believe that modest inflation, say 2-3 percent, might help reduce unemployment during recessions. What is the argument of economists who reject this idea?
A. Consumers would stop buying goods at higher prices, reducing demand, output, and
employment.
B. Firms will pocket the profits resulting from higher prices and have no incentive to expand
output and employment.
C. Wages and other costs would rise with the inflation, keeping firms from expanding
employment.
D. Consumer spending would shift to cheaper imported goods, reducing domestic demand
and employment.
C. Wages and other costs would rise with the inflation, keeping firms from expanding
employment
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Which oligopoly model was developed to explain price wars in an industry?
a. natural oligopolies b. cartels c. price leadership by a dominant firm d. game theory e. cost-plus theory
Recurring fluctuations in business activity over the course of one year are known as
a. seasonal variations. b. random fluctuations. c. the trend. d. the business cycle.