Suppose the nominal interest rate is 7 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 7 percent. At the end of the year, you have earned:
A. an increase in your purchasing power.
B. no increase in your savings.
C. no increase in your purchasing power.
D. a decrease in your purchasing power.
Answer: C
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Currently in the United States, banks count as their reserves
A) only the currency in their vault. B) the currency in their vault plus their holding of Treasury securities. C) only their holding of Treasury securities. D) their liabilities against which they pay no interest. E) the currency in their vault plus their deposits at the Federal Reserve.
If demand increases and supply decreases, then equilibrium price must decrease, but equilibrium quantity is indeterminate
a. True b. False Indicate whether the statement is true or false
Either a price floor or a price ceiling will result in a smaller quantity exchanged than if the price was at its equilibrium level
a. True b. False Indicate whether the statement is true or false
The demand for airline pilots results from the demand for air travel. This fact is an example of
A. the derived demand for labor. B. rising marginal resource cost. C. resource substitutability. D. elasticity of resource demand.