If a country increases its basic literacy rates, it will impact its economy by
A. decreasing aggregate demand.
B. decreasing aggregate supply.
C. increasing aggregate demand.
D. increasing aggregate supply.
Answer: D
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Under adaptive expectations theory, people expect the rate of inflation this year to be
Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 6 percent?
a. a real interest rate of 3 percent and an inflation rate of 2 percent. b. a real interest rate of 7 percent and an inflation rate of 1 percent. c. a real interest rate of 5 percent and an inflation rate of 1 percent. d. a real interest rate of 6 percent and an inflation rate of 1 percent.
When the government raises revenue by printing money, it imposes an "inflation tax" because the:
A. real value of money holdings falls. B. interest rate falls. C. difference between nominal and real interest rates becomes smaller. D. nominal value of money holdings falls.
The demand for a pack of gum is ________ than is the demand for a steak because ________.
A. less price elastic; a pack of gum is more of a luxury. B. less price elastic; a pack of gum requires a smaller portion of one's income. C. more price elastic; a pack of gum is more of a luxury. D. more price elastic; a pack of gum requires a smaller portion of one's income.