If the real interest rate is above zero, we know that the nominal interest rate must be:
A. lower than the inflation rate.
B. higher than the inflation rate.
C. equal to the inflation rate.
D. zero.
Answer: B
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Stabilization policies are policies designed to
A) move the economy closer to potential output. B) keep prices constant. C) keep output constant. D) increase trade.
The opportunity cost of a particular activity
a. must be the same for everyone b. is the value of all alternative activities that are forgone c. has a maximum value equal to the minimum wage d. varies from person to person e. can usually be known with certainty
A major distinction to be made is that deficits count government spending shortfalls ________, and public debt counts ________.
A. as a percentage of GDP; in nominal terms B. from all years; the total from a single year C. in a year; the total amount owed from all years D. in real terms; in nominal terms
A reduction in the marginal propensity to import will cause
A) the ZZ line to become flatter and a given change in government spending (G) to have a larger effect on domestic output. B) the ZZ line to become flatter and a given change in government spending (G) to have a smaller effect on domestic output. C) the ZZ line to become steeper and a given change in government spending (G) to have a larger effect on domestic output. D) the ZZ line to become steeper and a given change in government spending (G) to have a smaller effect on domestic output.