One of the Distinguishing Differences Between Periods of Low Inflation

question 169

Multiple Choice

One of the distinguishing differences between periods of low inflation and periods of high inflation is that

• A)low inflation periods are short lived.
• B)high inflation periods are short lived.
• C)high inflation periods are long lived.
• D)low inflation leads to high inflation.

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Definitions:

Competitive Price-Searcher Market

A market in which the firms have a downward-sloping demand curve, and entry into and exit from the market are relatively easy.

Positive Economic Profit

Earnings that exceed both the explicit and implicit costs of a company, indicating a financial gain beyond the normal expectations of profit.

Maximum Economic Profit

The highest possible financial gain obtainable by a firm when total revenue exceeds both explicit and implicit costs.

Competitive

Characterized by rivalry, where entities vie against each other to achieve or win something, such as market share or high performance.