Which of the following is a correct statement?
A. It is relatively easy to distinguish between cost-push and demand-pull inflation even if you don't know the source of the inflation
B. A supply shock will cause a variation of demand-pull inflation that can lead to hyperinflation
C. Demand-pull inflation will continue so long as there is excess total spending in the economy
D. Demand-pull inflation is usually accompanied by higher unemployment rates
C. Demand-pull inflation will continue so long as there is excess total spending in the economy
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A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q2. By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. What is its profit-maximizing output level?
a. 5 b. 6 c. 7 d. 8
Real business cycle theory argues that the primary cause of business cycles is fluctuations in
A) preferences. B) government spending. C) the importance of externalities. D) total factor productivity.