The experience of the 1970s and 1980s suggests that the cost of engaging in the process of disinflation is that
A. exports must increase.
B. deflation must occur.
C. nominal interest rates will be expected to increase.
D. unemployment will most likely increase.
D. unemployment will most likely increase.
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Besides world trade growth, what can explain the growth of international banking since the 1960s?
A) war in the Middle East B) government focus on banking regulation. C) an increase in world travel. D) the emergence of developing countries like China. E) desire of depositors to hold currencies outside the jurisdiction of the countries that issue them
Bonds issued by state and local governments are called ________ bonds
A) corporate B) Treasury C) municipal D) commercial
When persistent inflation is present, we would expect
a. borrowers to systematically gain at the expense of lenders. b. lenders to systematically gain at the expense of borrowers. c. nominal interest rates to be higher than would be true if prices were stable. d. nominal interest rates to be lower than real interest rates.
Suppose that it would cost a firm $9 million to develop a new drug. In the absence of a patent, other firms will be able to copy and bring to market a generic equivalent of the drug in three years. In each of these three years, the firm would earn monopoly profits of $4 million. A patent will generate monopoly status for the firm for twenty years. If the government knew this information ahead of time, which of the following is most correct?
A. The government should grant a patent to the firm, because the firm would not produce the drug at all without a patent. B. The government should grant a patent to the firm, because it does not have the resources to determine on a case-by-case basis exactly which inventions merit award of the patent. C. The government should grant a patent to the firm, because even with a patent the firm will not earn a monopoly profits. D. The government should not grant a patent to the firm, because the firm would earn sufficient profits to develop the drug without the patent.