Interest rates that are adjusted for expected inflation are known as:
A. nominal interest rates.
B. ex ante real interest rates.
C. coupon rates.
D. ex post real interest rates.
Answer: B
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Suppose the reserve requirement is 20 percent and banks hold no excess reserves. A $1 billion sale of government securities by the Fed will:
A. reduce checkable deposits in the banking system by $1 billion. B. increase checkable deposits in the banking system by $5 billion. C. reduce checkable deposits in the banking system by $5 billion. D. increase checkable deposits in the banking system by $1 billion.
Government spending is funded by a system of
A. taxation and borrowing. B. checks and balances. C. policies and laws. D. states and cities.
Assume that political business cycles do not exist. Given this assumption, we would expect, all else fixed, the output growth to be highest in which period?
A) just prior to an election B) just after an election C) in the first year of an administration D) in the second year of an administration E) none of the above
The soft drink (colas in particular) industry can be best modeled using the model of
A. monopolistic competition. B. perfect competition. C. monopoly. D. oligopoly.