How has growth in M2 minus the growth in real GDP compared to the inflation rate in the United States?
What will be an ideal response?
Since 1960, M2 growth minus the growth in real GDP has been closely correlated with inflation rates. The period of rapid inflation, during the 1970s, occurred at the same time there was a high growth rate of M2 minus the growth rate of real GDP. This correlation is present throughout all the years.
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When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil, the price of gasoline skyrockets. Hence is the demand for gasoline elastic or inelastic?
What will be an ideal response?
Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
Prior-to-trade (autarky) total economic surplus equals areas
A. A + B + C + E + F + J + I. B. A + B + C + D. C. A + B + C. D. A + B + C + E + F.