Exam 10: Measuring Macroeconomic Variables and Policy Issues

When prices are rising quickly, retailers will have to constantly change their prices. The cost incurred in changing prices is called a(n) _____.

If the inflation rate was 10 per cent and the price index was 120 in 2010, then what was the approximate value of the price index in 2009?

If there is an increase in aggregate demand while aggregate supply is perfectly inelastic, then:

The balance of payments measures all the financial flows between a country and its trading partners.

Inflation targeting by the central bank reduces price transparency for firms and consumers.

Which of the following is likely to occur in a recession?

Explain the trade-off between in?ation and GDP.

A firm reduces hiring in the next quarter following an agreement with the union to increase prices. This leads to structural unemployment.

Which of the following is a disadvantage of in?ation?

The balance of payments measures the:

Which of the following is an instrument of ?scal policy?

When does demand pull in?ation occur in an economy?

A decline in interest rates leads to a sharp increase in consumption and investment. The general price level in the economy also increases. This is an example of:

The _____ measures the percentage of people of working age who are in employment.

Suppose that the rate of inflation is 6% per year and the nominal interest rate for the year is 9%. The real rate of interest is _____.

Deflation increases the purchasing power of money.

Cost push inflation occurs when aggregate demand increases.

In order to calculate national income, depreciation is deducted from GDP.

When the UK is running a balance of payments deficit, this means that:

A country's balance of payments deficit is not likely to be a problem in the short run if the deficit is due to the fact that it is purchasing high-productivity capital items.