When the Fisher Effect holds, a one-percentage-point increase in the long-run money growth rate, because it ________ expected inflation, causes ________ in the nominal interest rate in the long run
A) equally lowers, a one-percentage-point decrease
B) does not change, a one-percentage point decrease
C) does not change, no change
D) equally raises, no change
E) equally raises, a one-percentage-point increase
E
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An increase in the government's budget deficit ________ the real interest rate and ________ the equilibrium quantity of national saving.
A. decreases; increases B. increases; increases C. increases; decreases D. decreases; decreases
It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business. Because of this, we predict that Gourmet Chocolatier's supply to be
A) inelastic. B) perfectly elastic. C) elastic. D) unit elastic. E) nonexistent.
In the foreign exchange market, a balance of payments deficit is represented by:
A) excess supply of dollars. B) excess demand for dollars. C) equilibrium in the foreign exchange market. D) none of the above.
The theory of portfolio choice indicates that higher interest rates make money ________ desirable, and the demand for real money balances ________
A) less; falls B) more; falls C) less; rises D) more; rises