In the medium run, a reduction in inflation causes
A) a reduction in the opportunity cost of holding money.
B) an increase in the opportunity cost of holding money.
C) no change in the opportunity cost of holding money.
D) individuals to switch from holding money to bonds and reduce their real money balances.
A
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The price elasticity of demand is measured as
A) the ratio of the typical consumer's quantity demanded to the entire quantity demanded in the market. B) the percentage change in quantity demanded divided by the percentage change in price. C) the number of purchases divided by the price of the product. D) price divided by quantity. E) quantity divided by price.
Unanticipated increase in inflation transfers wealth from the borrower, who pays the pre-decided rate of interest to the lender
Indicate whether the statement is true or false
What agreement has been reached to reduce the moral hazard problem and what does it require?
What will be an ideal response?
Assuming no bequests, with a real interest rate of 10 percent, wealth of $60,000, current income of $70,000, current consumption of $30,000 and future income of $100,000, future consumption equals ________
A) $30,000 B) $70,000 C) $100,000 D) $210,000