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20 Oct 2020

High and variable inflation discourages adjustments in response to changes in

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Cost and Benefit of Inflation
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Vaishali Yadav
Vaishali YadavLv10
20 Oct 2020

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What happens to an organization when it does not "adapt and learn''?

Please explain this statement in detail.

''Bureaucracy undermines new thinking, discourages disagreeing, misallocates power, it is an enemy of resilience, the government will stall if it does not adapt and learn.''

Why does a surplus exist under a binding price floor?

a. It encourages buyers to purchase more of the product.

b. It discourages sellers from increasing the quality of products they sell, which in turn increases the quantity demanded.

c. It makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market.

d. It encourages sellers to produce less of the product.

e. It makes the price so low that the quantity demanded exceeds the quantity supplied on the legal market.

Assuming people have rational expectations:
 
A) Monetary policy changes will cause the money supply to change, thereby causing changes in inflation and unemployment along a vertical Phillips Curve

B) When the Fed uses monetary policy, people quickly realize the impact that will be created by the policy, adjust wages and prices, and inflation will adjust to the new expectations which means the policy will not affect the real GDP

C) When the government uses fiscal policy, then changes in the money supply will create quick adjustments in wages and prices which will not cause changes in real GDP

D) When the Fed uses monetary policy, people do not quickly adjust wages and prices, therefore, inflation will deviate from expectations and create fluctuations in real GDP

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