Most economists agree that modest inflation is desirable over zero inflation because:
A. it allows a margin of error for those deciding on the money supply.
B. it allows the Fed to more easily engage in expansionary monetary policy.
C. it helps firms to more easily adjust real wages.
D. All of these statements are true.
Answer: D
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Suppose that the demand for artichokes (Qa) is given as: Qa = 200 - 4P. What is the price elasticity of demand if the price of artichokes is $10?
What will be an ideal response?
An advantage of using the cross-sectional regression method in estimating production is that
A) the problem of technological change over time is overcome. B) there is no need to adjust data, which are in monetary terms for geographical differences. C) we can assume that all plants operate at their most efficient input combinations. D) All of the above