A perceived permanent rise in the rate of money growth will cause what long-run effects in the economy?
a. a rise in the nominal rate of interest and a rise in inflation by the same percentage
b. a rise in the nominal rate of interest and a rise in real GDP by the same percentage
c. a fall in the nominal rate of interest and a rise in inflation by the same percentage
d. a fall in the nominal rate of interest and a fall in real GDP by the same percentage
Ans: a. a rise in the nominal rate of interest and a rise in inflation by the same percentage
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The share of the personal income tax paid by the bottom half of earners
a. rose to an all-time high in 2010. b. was substantially higher in 2010 than during the 1960s and 1970s. c. was substantially lower in 2010 than during the 1960s and 1970s. d. has been relatively constant during the last four decades.
Assume the asset market is always in equilibrium. Therefore a fall in Y would result in
A) higher inflation abroad. B) a decreased demand for domestic products. C) a contraction of the money supply. D) a depreciation of the home currency. E) an appreciation of the home currency.
The major reason tight money fell so heavily on housing in the past was that
A) people didn't like to borrow when interest rates were high. B) the reserve requirements on deposits at saving and loan institutions were higher than those for commercial banks. C) the lag effect of tight money on housing was long and variable. D) there were legal ceilings on the interest rates that saving and loan institutions could pay on their deposits.
Which of the following statements about elasticity of supply is true?
a. Elasticity of supply is always unity. b. Elasticity of supply is always zero. c. Elasticity of supply is always negative. d. Elasticity of supply is always positive.