In which of the following situations would you prefer to be the lender?
A) The interest rate is 9 percent and the expected inflation rate is 7 percent.
B) The interest rate is 4 percent and the expected inflation rate is 1 percent.
C) The interest rate is 13 percent and the expected inflation rate is 15 percent.
D) The interest rate is 25 percent and the expected inflation rate is 50 percent.
B
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In the new classical model, the aggregate supply schedule depends on
a. the expected level of the money stock. b. the expected price level. c. the expected values of fiscal policy variables and other possible determinants of aggregate demand. d. Both a and c e. All of the above
A cake is to be shared by two people. Both desire the largest piece possible. One of the two will cut the cake. Under which of the following situations will the cutter adopt a Rawlsian social welfare function?
A) The person cutting the cake chooses the first piece. B) The person not cutting the cake chooses the first piece. C) The two individuals will bid for the right to cut the cake and choose first. D) The two individuals will toss a coin for the right to cut the cake and choose first.
A financial strategy that reduces the chance of suffering losses arising from foreign exchange risk is referred to as
A) hedging. B) foreign exchange leverage. C) conversion depletion. D) transaction mitigation.
Which of the following would be considered a supply-side policy?
A. an increase in government regulations that require businesses to internalize pollution costs B. decreasing taxes to increase the incentive to work C. an increase in government spending that would lead to increased aggregate demand D. increasing the amount of Social Security contributions paid by businesses to help fund the Social Security program