Suppose that the nominal interest rate and expected inflation both decrease by 2%. Given this information, we would expect which of the following to occur?
A) an increase in the real interest rate
B) a reduction in the real interest rate
C) a reduction in investment
D) an increase in money demand
E) both A and C
D
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Your wage this year is $15 per hour and the CPI is 178. Next year you get a raise to $17 and the CPI rises to 185. What has happened?
A) Your real and nominal wages have each increased by the same percentage. B) Your real wage has increased but by a smaller percentage than your nominal wage. C) Your nominal wage has increased but your real wage has declined. D) Your nominal wage has increased but your real wage has not changed. E) Your real wage rate has increased by a larger percentage than your nominal wage.
Under a fixed exchange rate regime, if the domestic currency is initially undervalued, that is, above par, the central bank must intervene to sell the ________ currency by purchasing ________ assets
A) domestic; foreign B) domestic; domestic C) foreign; foreign D) foreign; domestic
All of the following are examples of fringe benefits except
a. health insurance. b. retirement payments. c. overtime payments. d. education subsidies.
When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increases from $6.5 trillion to $6.9 trillion. The MPS equals
a) 0.75 b) 0.76 c) 0.8 d) 0.2