Suppose a representative household holds a bond that is expected to pay a real return of $100 one year from now. However, over the next year, the inflation rate rises 15 percent more than was originally anticipated. As a consequence:
a. the real value of household wealth will increase.
b. consumption spending will increase, and aggregate demand will rise.
c. the purchasing power of money will rise.
d. savings will fall and aggregate expenditures will rise.
e. the aggregate expenditure in the economy will decrease.
e
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Which of the following is true? a. A nation cannot have a comparative advantage in the production of every good
b. A nation cannot have an absolute advantage in the production of every good. c. A nation can have a comparative advantage in the production of every good, but not an absolute advantage. d. A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.
Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, in terms of efficiency:
A. point A is preferred to point B. B. point A is preferred to point E. C. point A is preferred to point D. D. point B is preferred to point A.
Under which conditions might economies of scale result?
A. hampered coordination brought about by bureaucracy B. increasing costs of inputs C. increasing output prices D. workers having to spend less time switching back and forth between tasks.
The contributive standard (merit standard) for distributing income implies that
A. income should be distributed according to the marginal productivity of workers. B. income should be distributed according to need. C. a transfer should be contributed to an individual above his or her contribution to net output. D. income should be distributed equally.