If the money rate of interest is 12 percent and the real rate of interest 7 percent, the inflationary premium is
a. 5 percent.
b. 7 percent.
c. 12 percent.
d. 19 percent.
A
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Rational individuals prefer to consume goods during the current year rather than in the future because of:
a. positive time preference. b. positive consumption preference. c. high expected rate of inflation. d. high market rate of interest.
Suppose the accompanying figure illustrates the demand curve facing a monopolist.
If the monopolist decreases its price from $12 to $10, its total revenue will ________.
A. increase by $1,000 B. decrease by $1,000 C. decrease by $600 D. increase by $600
Which of the following is true?
A. Keynesians advocate decreasing the money supply during economic recessions but increasing the money supply during economic expansions. B. Monetarists advocate increasing the money supply by a constant rate year after year. C. Keynesians argue that the crowding-out effect is rather large. D. Monetarists argue that the crowding-out effect is rather insignificant.
If changes in inflation are higher than expected,
A) the long-run Phillips curve will be negatively sloped. B) the short-run Phillips curve will be positively sloped, but not vertical. C) the short-run Phillips curve will be vertical. D) the short-run Phillips curve will be negatively sloped.