Which of the Following Are Costs of High And/or Unexpected

question 31

Multiple Choice

Which of the following are costs of high and/or unexpected inflation?

• A) increased uncertainty
• B) lower real interest rates
• C) hurts indebted firms
• D) all of the above

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Definitions:

Perfect Competition

A market structure characterized by many buyers and sellers, identical products, and no barriers to entry or exit.

Zero Economic Profits

A situation in perfect competition where firms earn just enough revenue to cover all their costs, including opportunity costs, indicating no supernormal profit above the normal rate of return.

Long-Run Equilibriums

A state in which all factors of production and market forces are balanced and economic variables are not expected to change.

Implicit And Explicit Costs

Implicit costs are the opportunity costs of using resources that a firm already owns, while explicit costs are direct payment outflows for purchasing productive resources.