You are given the following information about the economy: the nominal interest rate = 8%; the real rate of interest = 6%. The inflation premium is
A. 14%.
B. 2%.
C. 8%.
D. 6%.
Answer: B
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The formula of the equation of exchange is
A) MS = VPY. B) MSV = PY. C) MS/P = Y. D) MS = Y.
The omission of household production causes actual economic production to be underestimated
Indicate whether the statement is true or false
How does asymmetric information affect a contract?
Suppose the federal government had budget surpluses of $80 billion in year 1 and $120 billion in year 2 but had budget deficits of $10 billion in year 3 and $40 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have
A. increased by $50 billion. B. decreased by $200 billion. C. increased by $150 billion. D. decreased by $150 billion.