Question :
31.Wheninflationcausesrelative-pricevariability,
a.consumerdecisionsaredistortedandtheabilityofmarketstoefficientlyallocatefactorsofproductionisimpaired.
b.consumerdecisionsaredistorted,bu : 1262106
31.Wheninflationcausesrelative-pricevariability,
a.consumerdecisionsaredistortedandtheabilityofmarketstoefficientlyallocatefactorsofproductionisimpaired.
b.consumerdecisionsaredistorted,butmarketsarestillabletoefficientlyallocatefactorsofproduction.
c.consumerdecisionsarenotdistorted,buttheabilityofmarketstoefficientlyallocatefactorsofproductionisimpaired.
d.consumerdecisionsarenotdistortedandmarketsarestillabletoefficientlyallocatefactorsofproduction.
32.Relativepricevariabilityis“automatic”when
a.firmschangepricesonlyonceinawhile.
b.firmschangepricesoften.
c.peopleincreasethefrequencyoftheirtripstothebank.
d.peopledecreasethefrequencyoftheirtripstothebank.
33.Higherinflation
a.causesfirmstochangepriceslessfrequentlyandmakesrelativepriceslessvariable.
b.causesfirmstochangepriceslessfrequentlyandmakesrelativepricesmorevariable.
c.causesfirmstochangepricesmorefrequentlyandmakesrelativepriceslessvariable.
d.causesfirmstochangepricesmorefrequentlyandmakesrelativepricesmorevariable.
34.Areductionintheinflationratewouldmakerelativeprices
a.lessvariable,makingitmorelikelythatresourceswillbeallocatedtotheirbestuse.
b.lessvariable,makingitlesslikelythatresourceswillbeallocatedtotheirbestuse.
c.morevariable,makingitmorelikelythatresourceswillbeallocatedtotheirbestuse.
d.morevariable,makingitlesslikelythatresourceswillbeallocatedtotheirbestuse.
35.Inflationisproblematicif
a.itislessthanthepercentageincreaseinnominalincome.
b.itislessthanthenominalreturnonsaving.
c.itequalsthegrowthrateofrealGDPinthelongrun.
d.itdistortsrelativeprices,causingamisallocationofresources.
36.U.S.taxlawsallowtaxpayers,incomputingtheamountoftaxtheyowe,tousetherealvalue,asopposedtothenominalvalue,of
a.bothinterestincomeandcapitalgains.
b.interestincomebutnotcapitalgains.
c.capitalgainsbutnotinterestincome.
d.neitherinterestincomenorcapitalgains.
37.IntheU.S.,peoplearerequiredtopaytaxeson
a.nominalinterestearnings,irrespectiveoftheirrealinterestearnings.
b.realinterestearnings,irrespectiveoftheirnominalinterestearnings.
c.realcapitalgains,irrespectiveoftheirnominalcapitalgains.
d.Alloftheabovearecorrect.
38.WhichofthefollowingareU.S.taxpayersallowedtoadjustforinflationforthepurposeofincometaxes?
a.bothinterestincomeandcapitalgains.
b.interestincomebutnotcapitalgains.
c.capitalgainsbutnotinterestincome.
d.neitherinterestincomenorcapitalgains.
39.IntheU.S.,taxesoncapitalgainsarecomputedusing
a.nominalgains.Thisisonewaybywhichhigherinflationdiscouragessaving.
b.nominalgains.Thisisonewaybywhichhigherinflationencouragessaving.
c.realgains.Thisisonewaybywhichhigherinflationdiscouragessaving.
d.realgains.Thisisonewaybywhichhigherinflationencouragessaving.
40.Youboughtsomesharesofstockand,overthenextyear,thepricepershareincreasedby5percent,asdidthepricelevel.Beforetaxes,youexperienced
a.bothanominalgainandarealgain,andyoupaidtaxesonthenominalgain.
b.bothanominalgainandarealgain,andyoupaidtaxesonlyontherealgain.
c.anominalgain,butnorealgain,andyoupaidtaxesonthenominalgain.
d.anominalgain,butnorealgain,andyoupaidnotaxesonthetransaction.