If people expect inflation to increase in the future, explain what will happen to consumption and saving
They will try to beat the future price increases by increasing their current level of consumption. They will
simultaneously reduce their current level of saving, since inflation will erode the purchasing power of
saved income.
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Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPad tablet. Suppose when the price of an iPad decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent
Based on this information iTunes are A) a normal good. B) an inferior good. C) substitutes for iPads. D) complements to iPads.
Suppose that the Federal Reserve Open Market Committee adheres to the ideas expressed by ________
If the economy moves into a recession, the Fed would recommend that the federal funds target rate decrease as long as the inflation rate did not rise above the publicly announced goal for inflation. A) the Taylor Rule B) the gold standard C) the monetarist school of thought D) inflation targeting