Stagflation refers to
A) a reduction in inflation.
B) a simultaneous reduction in inflation and reduction in unemployment.
C) a liquidity trap.
D) reduction in the price level and a reduction in the unemployment rate.
E) none of the above
E
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An asset-price bubble is caused by:
A. people buying assets because they believed prices would keep going up and they'd be able to sell for a profit. B. fads that make owning a certain asset fashionable. C. severe inflation within a short period of time. D. the increase in the value of durable goods when the economy is experiencing low inflation.
Compared with a system of fixed exchange rates, currency unions have the disadvantage of
A. requiring every country to share a common fiscal policy. B. decreasing the sacrifice ratio. C. allowing exchange rates to float. D. requiring all its members to share a common monetary policy.