When an economy experiences deflation, consumption will:
A. decrease, because people will want to wait for prices to drop before spending.
B. increase, because people will want to wait for prices to drop before spending.
C. decrease, because people will lose value in their savings.
D. increase, because people will lose value in their savings.
A. decrease, because people will want to wait for prices to drop before spending.
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Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e). Assume M = 4000, P = 2.0, ?e = .03, and Y = 5000. The real interest rate that clears the asset market is
A) 3%. B) 6%. C) 11%. D) 14%.
If there is a(n) __________ in reserves, the potential change in demand deposits is __________
A) deficiency; 0 B) deficiency; positive C) deficiency; negative D) excess; negative
_____ a cornerstone of the market economy
a. Mutually beneficial exchange is b. A strong central bank c. Monopoly rents are d. Government regulation is
A capital gains tax acts to
A) reduce the interest rate received by loan demanders. B) increase the interest rate received by loan demanders. C) increase the interest rate received by loan suppliers. D) reduce the interest rate received by loan suppliers.