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Try to answer each of the questions on a piece of paper. When you are finished, watch the videos next to each question to get the solution. These will only be as helpful as you make them. Answer first, watch second.
Try to answer each of the questions on a piece of paper. When you are finished, watch the videos next to each question to get the solution. These will only be as helpful as you make them. Answer first, watch second.
1
1
When inflation raises the price level, but the wages paid to workers and the price of resources remain the same, what will happen to producers' profits? How will their production of output respond to these changes?
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2
If inflation raises the price level, but the wages paid to workers stays the same, what will happen to the purchasing power of consumers?
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3
What forces prevent wages and resource prices from adjust to inflation as quickly as the price level does? How does inflation eventually reach wages and resource prices?
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4
According to Keynes, how should the government respond to an economy that is in recession? How should it respond to an economy that is booming?
5
5
Suppose that people tend to save 20% of any additional money they receive, and they spend the rest. If the government increases their spending by $250 billion without crowding out anyone else's spending, how much will GDP increase?
Module 7 Quick Quiz
Module 7 Quick Quiz
Now that you have watched all the videos and tried all of the example problems, see how you do on this short quiz. If you score under 75%, consider reaching out to your course instructor for some advice.
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