What would happen to the real interest rate if originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:
a. 24% to 11%.
b. 11% to 24%.
c. 4% to 3%
d. 3% to 4%.
c
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production
A) Competition B) A centrally planned economy C) Equity D) Voluntary exchange
During a recession, the ideal stimulus is all of the following EXCEPT:
A. theoretical. B. targeted. C. temporary. D. timely.
Equilibrium in a market occurs when
A. quantity supplied and quantity demanded are equal at the market clearing price. B. price is at its minimum. C. demand and supply indicate a small surplus of a good. D. the market price leads to a decrease in quantity demanded.