A change in expectations about future prices by consumers, who now believe that prices will be higher than they earlier thought, will eventually result in a(n)
a. increase in the interest rate
b. decrease in the interest rate
c. change in the interest rate but the direction of the change depends upon how much expectations changed
d. change in the market rate of interest but the equilibrium rate of interest remains unchanged
e. change in the equilibrium rate of interest but the market rate of interest remains unchanged
A
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Contrary to what the Phillips curve would have predicted, the U.S. economy in the 1970s experienced simultaneous increases in inflation and unemployment
a. True b. False Indicate whether the statement is true or false
Price controls
A) do not include black markets. B) are another name for the price system. C) do not include rent controls. D) interfere with the rationing function of prices.
At the point where a fair price is set,
a. price = average total cost (ATC) b. price = marginal cost c. price = marginal revenue d. price = total cost e. price = total revenue
The spot exchange rate is equal to the forward exchange rate:
a. Only when the exchange rate is equal to 1.00 because then the inverse is also 1.00. b. When the central bank chooses to equalize both rates. c. When the interest rates of the two countries are not expected to change. d. When the difference between the interest rates of the two countries are expected to remain constant. e. When the nominal interest rates of the two countries are equal.