A high rate of inflation is likely to cause a:
A. high nominal interest rate.
B. low nominal interest rate.
C. low rate of growth of nominal GDP.
D. decrease in nominal wages.
A. high nominal interest rate.
You might also like to view...
What is a policy that could help recipients of government aid avoid the poverty trap?
a. Providing aid regardless of a person’s income b. Requiring recipients to perform community service c. Setting a time limit for how long benefits can be received d. Limiting the amount of benefits a person can receive
Which of the following is not a characteristic of less-developed countries?
a. a focus on production of consumption goods b. low levels of investment in capital goods c. political instability d. a high percentage of the population under age 15 e. adequate infrastructure
The labor supply curve may have a backward-bending portion if, at higher wages, the income effect is
a. smaller than the substitution effect. b. larger than the substitution effect. c. negative. d. Any of the above could result in a backward-bending supply curve.
Which of the following events led to the crisis in macroeconomics and to the development of rational expectations theory?
A) the Great Depression B) the stock market crash of 1987 C) the stock market speculative bubble of the late 1990s D) stagflation in the 1970s E) large budget deficits in the 1980s