If the nominal interest rate is 7 percent and the real interest rate is -2.5 percent, then the inflation rate is
a. -9.5 percent.
b. -4.5 percent.
c. 4.5 percent.
d. 9.5 percent.
d
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If the actual interest rate in the money market is higher than the equilibrium interest rate, there would be an excess supply of money
Indicate whether the statement is true or false
If a firm is achieving economic efficiency it must also be achieving technological efficiency
Indicate whether the statement is true or false
The quantity theory of money assumed
A) that an increase in prices causes a proportionate increases in real GDP. B) a fall in the velocity of money causes a proportionate increase in the money supply. C) a rise in money supply causes a proportionate fall in velocity. D) the fraction of income people desire to hold in the form of money is a constant.
Demand-pull inflation is initiated by an increase in aggregate demand.
Answer the following statement true (T) or false (F)