The demand for money is given by Md = $Y (0.3 - i), where $Y = 120 and the supply of money is $30. a. What is the equilibrium interest rate? b. If the central bank wants to decrease i by 2%, at what level should it set the supply of money?
What will be an ideal response?
a. i = 5%.
b. Ms = 32.4.
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Explain how the current U.S. tax system levies taxes on capital gains and earned interest. What does this mean for the costs of inflation?
What will be an ideal response?
The above figure shows the market for hamburger. Which panel shows the effect of a drought in "cattle country"?
A) Figure A B) Figure B C) Figure C D) Figure D
If a market is perfectly competitive and is in long-run equilibrium, which of the following conditions does not hold?
A) Price is equal to the minimum long-run average cost of production. B) Economic profit equals zero. C) The value of the last unit of output produced is equal to the value of the resources used to produce it. D) There is an incentive for additional firms to enter the market because existing firms are earning revenues in excess of the explicit costs of production.
An increase in the expected future domestic exchange rate causes the demand for domestic assets to ________ and the domestic currency to ________, everything else held constant
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate