Question

Disinflation is the term for a period during which overall inflation rates are:

Multiple Choice

• positive and falling.

• positive and increasing.

• zero.

• negative.

If inflation was zero percent, nominal interest rates would be:

Multiple Choice

• equal to real interest rate.

• larger than real interest.

• at the optimal rate.

• smaller than real interest.

The net result of deflation is to:

Multiple Choice

• reduce the level of aggregate supply in the economy.

• increase the level of aggregate demand in the economy.

• reduce the level of aggregate demand in the economy.

• be neutral and not affect the aggregate demand in the economy.

Inflation rates over the last 40 years have generally:

Multiple Choice

• unchanged for developing nations and decreased for developed nations.

• decreased around the world.

• increased around the world.

• decreased for developing nations and increased for developed nations.

Answer 1

1)Disinflation is the term for a period during which overall inflation rates are:

• positive and falling.

under the disinflation, price falls but still above the zero level.

2)If inflation was zero percent, nominal interest rates would be:

Multiple Choice

• equal to real interest rate.

Real interest rate = Nominal interest - inflation rate.

3) The net result of deflation is to:

Multiple Choice

• reduce the level of aggregate supply in the economy.

Fall in aggregate demand further leads to fall in supply,

4) Inflation rates over the last 40 years have generally:

Multiple Choice

• increased around the world.

Inflation has increased around the world.

Answer 2

Number one is positive and falling.