What is the difference between an inflation-indexed Treasury bond, and a Treasury bond that is not indexed?
A) An inflation-indexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not.
B) A nonindexed Treasury bond guarantees a certain real rate of return, while a nonindexed Treasury bond does not.
C) An inflation-indexed Treasury bond can only be purchased directly from the Federal Reserve, while a nonindexed Treasury can be purchased through a broker.
D) An inflation-indexed Treasury bond always guarantees the purchaser a 5 percent rate of return, while a nonindexed Treasury bond does not.
A
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A rightward shift in aggregate demand will cause an increase in output and no change in the price level if aggregate supply is
A. Upward-sloping to the right. B. Vertical. C. Horizontal. D. Downward-sloping to the right.
An increase in the price of the good measured on the horizontal axis will cause the budget line to:
A. shift outward. B. become steeper. C. become flatter. D. shift inward.
If deficit spending does not contribute to public investment and crowds out private investment, then
A. Future productive capacity will be enhanced. B. The current generation will bear the total burden of the debt. C. The opportunity cost of the debt will be minimized. D. The rate of economic growth will decline, ceteris paribus.
The automatic adjustment mechanism that makes the economy move towards the long-run Phillips Curve is:
A. Expansionary fiscal or monetary policy B. Inflation expectations and wage adjustments C. Contractionary fiscal or monetary policy D. Increases in productivity over time