Suppose the U.S. economy is producing at the natural rate of output. An appreciation of the U.S. dollar will cause ________ in real GDP in the short run and ________ in inflation in the long run, everything else held constant
(Assume the appreciation causes no effects in the supply side of the economy.) A) an increase; an increase
B) a decrease; a decrease
C) no change; an increase
D) no change; a decrease
B
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Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Has Tom made the best decision?
A. Yes, because he's earning an accounting profit of $35,000. B. No, because he's earning an economic profit of $6,000. C. Yes, because his accounting profit is larger than his economic profit. D. No, because his accounting profit is larger than his economic profit.
Which of the following statements most accurately describes the relationship between the nominal and real interest rates?
a. The real interest rate is the expected inflation rate plus the nominal interest rate. b. The real interest rate is the expected inflation rate minus the nominal interest rate. c. The real interest rate is the nominal interest rate minus the expected inflation rate. d. The real interest rate is the nominal interest rate multiplied by the expected inflation rate. e. None of the above statements is accurate.
Which of the following statements best completes this sentence: "On a bank's balance sheet…"?
A. net worth represents both a source and a use of funds. B. net worth shows the sources of funds and liabilities show the uses of funds. C. assets show the uses of funds and liabilities show the sources of funds. D. assets show the sources of funds and the net worth shows the uses of funds.
Trade-offs involve an exchange of one thing for another because resources are limited and can be used in different ways.
Answer the following statement true (T) or false (F)