Deflation means a decrease in:

Deflation means a decrease in:
 a. the rate of inflation.
  b. the prices of all products in the economy.
  c. homes, autos, and basic resources.
  d. the general level of prices in the economy.

QUESTION 2

The greater the marginal propensity to consume in the economy, the smaller the spending multiplier.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

Under adaptive expectations theory, a decrease in the short-run aggregate demand curve ____ the inflation rate and ____ the unemployment rate.
 a. increases; increases
  b. increases; decreases
  c. decreases; increases
  d. decreases; decreases

QUESTION 4

Deflation refers to a:
 a. decreasing relative prices.
  b. decreasing price level.
  c. slowing down of the rate of inflation.
  d. federal government policy of running budget surpluses.

QUESTION 5

An increase in the marginal propensity to consume (MPC) leads to a increase in the spending multiplier.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

Under adaptive expectations theory, an increase in the short-run aggregate demand curve ____ the inflation rate and ____ the unemployment rate.
 a. increases; increases
  b. increases; decreases
  c. increases; does not change
  d. decreases; increases

QUESTION 7

Suppose the price of gasoline rises and consumers cut back on their use of gasoline relative to other consumer goods. This situation would contribute to which bias in the consumer price index?
 a. Substitution bias.
  b. Transportation bias.
  c. Quality bias.
  d. Indexing bias.