Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent
If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent.
A) 8; 6 B) 8; 2 C) 0; 1 D) 8; 4 E) 6; 2
B
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Which of the following is not something that John Maynard Keynes used to describe an economist? a. He must be a mathematician, historian, statesman, and philosopher in some degree. b. He must understand symbols and speak in words
c. He must only contemplate in abstract and general terms. d. He must study the present in light of the past for purposes of the future.
If Bob in Texas buys bonbons made in France for $25, and the French chocolatier buys stock in IBM for $25, then the French net exports:
A. equals $25 and net capital outflow is zero. B. is zero and net capital outflow is $25. C. and net capital outflow both equal $25. D. and net capital outflow are both zero.
In the short run:
A. TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate. B. TVC will increase for a time at an increasing rate, but then beyond some point will increase at a diminishing rate. C. TVC will increase by the same absolute amount for each additional unit of output produced. D. one cannot generalize concerning the behavior of TVC as output increases.
Prospect theory would suggest that:
A. Buyers would feel the "loss" due to an increase in the price of something they buy more than the "gain" they'd feel if the price fell by an equal amount B. Buyers would feel the "loss" due to an increase in the price of something they buy less than the "gain" they'd feel if the price fell by an equal amount C. Buyers are more conscious about changes in the size of a chocolate bar than about changes in its price D. Buyers are not fooled by sellers who keep their prices constant but shrink the size of their products