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6. Low inflation is also know as…

  • Price stability
  • Price control
  • Inflation
  • Recession
  • Price instability
  • price convergence
  • Price deflation

7. Inflation is widely regarded as an important issue for macroeconomic policy-makers because inflation…

  • Can cause widrer economic costs lncluding slower growth
  • Allows savers to improve their standard of living
  • Allows producers to make higher profits each year
  • Increases the return on business investments

8. A possible concern for businesses if deflation occurs is that:

  • Banks will increase interest rates
  • Consumers may postpone spending decisions
  • Raw material will become more expensive
  • The value of stocks will rise

9. Which one of the following would NOT be a possible cause of cost-plus inflation

  • Increased supply in raw material markets
  • Growth in factory wages
  • Commodity price increases
  • A weaker exchange rate

10. Deflation describes a period in the economy when

  • The value of an exchange rate is falling
  • The average level of prices is falling
  • Economic growth is falling
  • The rate of growth in prices is slowing