If velocity remains constant, which of the following examples would cause inflation?
a. Money supply increases by 8 percent; real GDP increases by 6 percent.
b. Money supply increases by 5 percent; real GDP increases by 5 percent.
c. Money supply increases by 4 percent; real GDP increases by 7 percent.
d. Money supply increases by 9 percent; real GDP increases by 10 percent.
a. Money supply increases by 8 percent; real GDP increases by 6 percent.
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A large business finds it __________ than a small business to pursue secretly a high-risk investment in violation of the terms of its loan agreement, and so the large business is __________ beset by the moral hazard problem
A) more difficult; more B) more difficult; less C) easier; more D) easier; less
Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculators Per HourComputers Per HourSmith10010Jones1206 Suppose Smith and Jones begin by producing 100 calculators per hour; as Smith and Jones choose to efficiently produce fewer computers and more calculators, ________ should devote more time to calculators because his ________.
A. Jones; absolute advantage is smaller B. Smith; opportunity costs are lower C. Smith; absolute advantage is larger D. Jones; opportunity costs are lower
We have heard the predictions regarding the large number of people that will be retiring over the next 25-50 years and the strain this is going to place on the federal budget. Assuming that federal borrowing will have to increase, what is the likely impact going to be on the risk and term structure (if any) of interest rates and why?
What will be an ideal response?
The book cites a result where after of the implementation of the congestion tax in Stockholm, Sweden of $1.50-$3.00, traffic volume was reduced and travel time for cars and buses was cut in half. This is an example of:
A. responding to incentives. B. the role of pricing in allocating resources. C. caveat emptor. D. comparative advantage.