Developing countries employ the inflation tax because it provides a:
A. long-run solution to both their economic and political problems.
B. short-run solution that helps keep the government afloat, even if only temporarily.
C. a solution to their inflation problem.
D. long-run solution to their budget problems even if it is politically unpopular.
Answer: B
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After the September 11, 2001 attacks on the World Trade Center, the supply of downtown office space in Manhattan was dramatically reduced. Forecasters predicted that the equilibrium price would rise, but in fact the price fell
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If a bank's reserve ratio is increasing,
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What will be an ideal response?