The real costs of inflation to society include:
A. an increase in the general level of prices.
B. higher relative prices.
C. lost purchasing power of income.
D. interference with long-term planning.
Answer: D
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Policy activists' hope that they can undertake successful stabilization policy is ________ by the fact that natural real GDP ________ during recessions
A) improved, falls B) worsened, falls C) improved, increases D) worsened, increases
Which of the following statements is correct?
a. If the inflation rate is steady at 5 percent, for example, the real and nominal interest rates will be equal. b. An increase in the demand for goods now compared with goods in the future would cause the real interest rate to rise. c. A "positive rate of time preference" means that an individual would rather save than consume. d. During an extended inflationary period, the money (or nominal) interest rate will usually be lower than the real rate of interest.
All modern economies depend on
A. the exploitation of workers. B. government ownership of the means of production. C. free-enterprise. D. specialization.
The present value of $120 to be received one year from now
A) is $120. B) is $100. C) is $121. D) depends on the rate of discount.