The Trend Toward a Decline in the Rate of Inflation

question 50

Multiple Choice

The trend toward a decline in the rate of inflation since the middle to late 1980s has been generally attributed to

• A) higher prices abroad, leading to a reduction in our imports.
• B) the growth in manufacturing employment relative to employment in services.
• C) an increase in tariffs to keep out foreign goods.
• D) the monetary policy pursued by the Fed.
• E) expansionary fiscal programs undertaken by Presidents Bush and Clinton.

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Definitions:

Common-value Auction

A type of auction wherein all bidders have the same valuation for the item for sale, but they have different information about the item’s actual value.

Exact Value

The precise numerical quantity or measurement without approximation.

Estimate

To make an approximate judgment or calculation of the value, number, quantity, or extent of something.

Winner's Curse

A phenomenon that occurs in auctions where the winning bidder pays more than what the item is actually worth, usually because of incomplete information or misjudgment.