an inflation rate in excess of 200%, lasting at least one year
What will be an ideal response?
hyperinflation
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Suppose you hear of a great deal on a used car and wonder, "Why is the price so low?" This might be an instance of ________
A) tyranny of collateral B) adverse selection C) the free rider problem D) moral hazard
Which of the following will occur when an economy is faced with a liquidity trap situation?
A) A reduction in the price level will cause a rightward shift in the aggregate demand curve. B) A reduction in the price level will cause a leftward shift in the aggregate demand curve. C) The aggregate demand curve is now vertical. D) The aggregate demand curve is now upward sloping.
Consider a small open economy with desired national saving of Sd = 20 + 200rw and desired investment of Id = 30 - 200rw.Calculate national saving, investment, and the current account balance in equilibrium when the real world interest rate is(a)rw = 0.025.(b)rw = 0.05.(c)rw = 0.0.(d)Now suppose something causes desired national saving to increase by 10, so that it is now Sd = 30 + 200rw. Repeat parts (a), (b), and (c).(e)Suppose, with desired national saving at its original level of Sd = 20 + 200rw, something causes desired investment to rise by 10, to Id = 40 - 200rw. Repeat parts (a), (b), and (c).
What will be an ideal response?
The government's role in a developing country is important during the country's development process for all of the following reasons except
A. many social projects are associated with the free-rider problem, which minimizes the rate of return to the private sector. B. building infrastructure is a huge project that only the government can undertake. C. the government is the only institution with a vested interest in a country's development. D. building social overhead capital cannot successfully be taken on by the private sector.