If the rate of inflation in a given time period turns out to be higher than lenders and borrowers anticipated, then the effect will be:
a. no change in the distribution of wealth between lenders and borrowers.
b. a net gain in purchasing power for lenders relative to borrowers.
c. a redistribution of wealth from borrowers to lenders.
d. a redistribution of wealth from lenders to borrowers.
d
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Generally speaking, as more of a particular good is purchased, a consumer's marginal utility ____ and total utility ____
a. increases; decreases b. decreases; increases c. increases; increases d. decreases; decreases e. generalizations cannot be made
An open market purchase of bonds by the Fed
a. drains reserves from the banking system and decreases the money supply b. injects reserves into the banking system and increases money demand c. injects reserves into the banking system and increases the money supply d. drains reserves from the banking system and increases the money supply e. injects reserves into the banking system and decreases the money supply
A negative income tax system would provide all households, including the poor, with:
A. cash payments. B. incentives to earn income. C. higher income levels. D. medical assistance.