Critically evaluate the statement Honolulu is an expensive place ...

[urbanoutfitters]

Critically evaluate the statement Honolulu is an expensive place to live. Therefore the inflation rate must be high in Honolulu.
 
  What will be an ideal response?

Question 2

If there is a rise in the price level, there is a(n) ________ movement along the AS curve because there is ________ in the quantity of real GDP supplied.
 
  A) upward; a decrease
  B) downward; an increase
  C) upward; no change
  D) upward; an increase
  E) downward; a decrease

[ttt030911]

Answer to Question 1

The statement confuses the price level with the inflation rate. Inflation is a flow variableit measures changes in prices from year to year, while the price level is a stock variable. The statement observes the price level, not the inflation rate.

Answer to Question 2

D

[urbanoutfitters]

Excellent

[yeungji]

Thanks for the timely response, appreciate it