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EC201 chapter_7_Quiz Full

A growingper capitaoutput b rapidincrease

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Unformatted text preview: ecession will lead to reduced output in the future, but inflation will lead to increased output in the future. D) A recession will lead to increased output in the future, but inflation will lead to decreased output in the future. Answer: B Diff: 2 Topic: Inflation Skill: Conceptual AACSB: Reflective Thinking 2 Tr ue /F al s e 1) The CPI overstates changes in the cost of living because it does not allow for substitutions that consumers might somewhat make in response to price changes. Answer: TRUE Diff: 3 Topic: Inflation Skill: Analytic AACSB: Analytic Skills 2) A 100% increase in the price of salt changes the CPI more than a 10% increase in rent. Answer: FALSE Diff: 2 Topic: Inflation Skill: Fact 3) An inflation rate that is lower than expected benefits creditors. Answer: TRUE Diff: 3 Topic: Inflation Skill: Conceptual AACSB: Reflective Thinking 4) There are no costs associated with inflation if the inflation rate is perfectly anticipated. Answer: FALSE Diff: 2 Topic: Inflation Skill: Conceptual...
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