Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Suppose that you borrow $60 and spend $160 today. After you repay your loan one year from today, how much money will you have available for consumption one year from today?
a. $0
b. $25
c. $50
d. $75
b
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GDP tends to overstate economic well-being because it takes into account ________.
A. improvements in product quality over time B. expenditures undertaken to correct pollution C. nonmarket activities, such as the productive work of homemakers D. illegal activities of individuals and businesses
Inflation that is ________ than what is expected benefits ________ and hurts ________
A) greater; lenders; no one B) greater; lenders; borrowers C) less; lenders; borrowers D) less; borrowers; lenders
If orange juice prices double next year, there will be a
a. rightward shift in the demand for grapefruit juice. b. rightward shift in the supply of grapefruit juice. c. leftward shift in the supply of grapefruit juice. d. leftward shift in the demand for grapefruit juice.
Monetary policy authorities can only affect the real economy, if:
a. their actions are anticipated by the public b. their actions are fully communicated to the public c. their actions are consistent and predictable. d. their actions systematically fool the public