What is inflation, and what causes it?
How are inflation and unemployment related in the short
run?
Describe some of the trade-offs faced by each of the
following:
a. A decision by an entrepreneur starting a small business
to borrow some start-up capital from a bank or raise the
funds through borrowing from friends and relations.
b. A member of the government deciding how much to
spend on some new military hardware for the defence
industry.
c. A chief executive officer deciding whether to invest in a
new more efficient heating system for the company’s
headquarters.
d. A worker in a hotel deciding whether to accept the offer
by her manager of extra shifts in the restaurant.