Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then
A) lenders gain 1% of the loan value. B) borrowers lose 3% of the loan value.
C) lenders gain 3% of the loan value. D) borrowers gain 1% of the loan value.
D
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Which of the following economists rejected the notion that economic growth was caused by the evolution of commercial society?
A) Adam Smith B) Paul Heyne C) Karl Marx D) All of the above. E) None of the above.
If the cross elasticity of demand for potato chips and pretzels equals 1.5,
A. potato chips and pretzels must both be luxury goods. B. either potato chips or pretzels must be a luxury good, and both may be luxury goods. C. potato chips and pretzels must be substitutes. D. potato chips and pretzels must be complements.
Temporary supply shocks change which of the following? a. SRAS
b. LRAS. c. AD. d. Both a. and b.
Why might Congress find it easier to promote full employment than to curb inflation?