For a given real interest rate, an increase in inflation makes the after-tax real interest rate
a. decrease, which encourages savings.
b. decrease, which discourages savings.
c. increase, which encourages savings.
d. increase, which discourages savings.
b
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The justification for government action based on the argument that everyone agrees to be coerced if everyone else is forced as well is not compatible with the criterion of Pareto superiority
a. True b. False
When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets, the only choice the firm has to affect its profits is to:
A. increase its selling price. B. change the quantity it produces. C. decrease the selling price. D. decrease its cost of production lower than other firms.
Under pure competition in the long run:
A. neither allocative efficiency nor productive efficiency is achieved. B. both allocative efficiency and productive efficiency are achieved. C. productive efficiency is achieved, but allocative efficiency is not. D. allocative efficiency is achieved, but productive efficiency is not.
Explain the two popular opinions held by economists on how to improve the economy
What will be an ideal response?