An increase in costs will ?

A. Shift aggregate demand
B. Shift aggregate supply
C. Reduce the natural rate of unemployment
D. Increase the productivity of employees

The Phillips curve shows the relationship between inflation and what ?

A. The balance of trade
B. The rate of growth in an economy
C. The rate of price increase
D. Unemployment

In 1989, the CPI was 124.0 in 1990, it was 130.7 What was the rate of inflation over this period ?

A. 5.4 percent
B. 30.7 percent
C. You can’t tell without knowing the base year
D. 5.1 percent

The “basket” on which the CPI is based is composed of ?

A. Consumer production
B. Products purchased by the typical consumer
C. Raw materials purchased by firms
D. Total current production

In the short run unemployment may fall below the natural rate of unemployment if ?

A. Nominal wages have risen less than inflation
B. Nominal wages have risen at the same rate as inflation
C. Nominal wages have risen more than inflation
D. Nominal wages have risen less than unemployment

If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected ?

A. None of these answers
B. Workers will gain at the expense of firms
C. Neither workers nor firms will gain because the increase in wages in fixed in the labor agreement
D. Firms will gain at the expense of workers.

Inflation ?

A. Reduce the cost of living
B. Reduce the standard of living
C. Reduce the price of products
D. Reduce the purchasing power of a rupee

An increase in aggregate demand is more likely to lead to demand pull inflation if ?

A. Aggregate supply is perfectly elastic
B. Aggregate supply is perfectly inelastic
C. Aggregate supply is unit elastic
D. Aggregate supply is relatively elastic

The effect of inflation on the price competitiveness of a country’s products may be offset by ?

A. An appreciation of the currency
B. A revaluation of the currency
C. A depreciation of the currency
D. Lower inflation abroad

If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate must be ?

A. 3/8 percent
B. 5 percent
C. 11 percent
D. 24 percent