Interest rates are positive because inflation makes purchases more expensive in the future than today
Indicate whether the statement is true or false
False. Even if inflation were zero, interest rates would be positive since people prefer present consumption to future consumption.
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Using the table above, what is the elasticity of demand between the prices of $6 and $4?
A) 1 B) 3/2 C) 2/3 D) 2 E) 4
If a monopsony must negotiate with a union, then the wage will probably be
A) more than the value of marginal product. B) more than the marginal cost of labor. C) the same as if there had been no union. D) more than what it would have been without a union but not more than the value of marginal product.
Which one of the following would be an effective fiscal policy in raising national income and reducing unemployment?
A. a decrease in government expenditures B. an increase in net taxes C. cutting back on unemployment benefits D. A reduction in income taxes
Why are changes in the output gap larger than changes in the unemployment gap? Why is the relationship expressed in Okun's law not affected by inflation or expected inflation?
What will be an ideal response?