When continued for several years, rapid growth in the money supply relative to the growth of real output will likely lead to an extended period of
a. low unemployment.
b. high inflation.
c. low nominal interest rates.
d. high rates of real economic growth.
B
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An option that gives the owner the right to sell a financial instrument at the exercise price within a specified period of time is a
A) call option. B) put option. C) American option. D) European option.
Matt has $2000 saved for a trip at Spring Break. Over Christmas break he decides to spend $400 of it on gifts instead of putting the gifts on his credit card, thus avoiding interest charges. He gradually replaces it in his savings account over the next two months. An economist would say this behavior is:
A. rational. B. irrational. C. utility minimizing. D. not observable.
A currency depreciation is usually inflationary
a. True b. False Indicate whether the statement is true or false
Which of the following statements would Milton Friedman disagree with?
A. In practice, there is little scope for using monetary policy actively to smooth out business cycles. B. In the long run, changes in the money supply primarily affect the price level. C. Monetary policy has few short-run effects on the real economy. D. The Federal Reserve cannot be relied on to effectively smooth out business cycles.