You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By 2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0 percent in 2009. Considering only your mortgage, is inflation good news or bad news for you?
A. bad news, because inflation hurts everyone
B. bad news, because it makes the real value of your mortgage payments increase
C. good news, because it makes the real value of your mortgage payments decrease
D. bad news, because it makes the nominal value of your mortgage payments increase
Answer: B
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On the island of Yap, 5 canoes have a value of one stone wheel known as a fei. What function of money do fei serve in this example?
A. store of value B. medium of exchange C. medium of deferred payment D. unit of account
________ is the study of an economy as a whole
A) Game theory B) Microeconomics C) Behavioral economics D) Macroeconomics
Consider the opportunity costs of producing goods X and Y that are listed for the four individuals above. Which person has a comparative advantage in producing good X?
A) Pramilla B) Sam C) George D) Lucas
If the money supply in the economy were at MS2, and the Federal Reserve Bank used open market operations to move money supply to MS1 the overall result in the economy would be:
A. Aggregate demand shifted in, causing GDP to fall.
B. Aggregate supply shifted in, causing GDP to fall.
C. Aggregate demand shifted out, causing GDP to rise
D. LRAS move to the FE level of output.