If borrowers and lenders expect a higher rate of inflation,
A. nominal interest rates should decrease.
B. nominal interest rates should remain constant.
C. nominal interest rates should increase.
D. real interest rates should increase.
Answer: C
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In economic theory, the idea of the equimarginal principle, or consumer equilibrium, means:
a. consumers appear to be similar in their buying habits, which explains why prices are almost always in equilibrium. b. to maximize utility, consumers allocate all of their incomes among goods so as to equate the total utility of all units of goods purchased. c. to maximize utility, consumers must allocate their scarce incomes among only the cheapest products available. d. to maximize utility, consumers must allocate their scarce incomes among goods so as to equate the marginal utilities per dollar of expenditure on the last unit of each good purchased. e. the marginal utilities among luxury goods are always equal among certain high-income earners.
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the net nonreserve international borrowing/investing balanceand monetary base in the context of the Three-Sector-Model? a. The net nonreserve international borrowing/investing
balance becomes more positive (less negative) and monetary base rises. b. The net nonreserve international borrowing/investing balance becomes more negative (less positive) and monetary base falls. c. The net nonreserve international borrowing/investing balance becomes more negative (less positive) and monetary base falls. d. The net nonreserve international borrowing/investing balance and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
If two goods are substitutes, their cross-price elasticity will be
a. positive. b. negative. c. zero. d. equal to the difference between the income elasticities of demand for the two goods.
Linda applies for a job in construction, but she never gets an interview, while her four male friends do. Linda is probably a victim of ______.
a. the Gini coefficient b. the Lorenz curve c. wage discrimination d. job-entry discrimination