Suppose the nominal interest rate is 10 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 4 percent. At the end of the year, you have earned a real rate of interest of:
A. 4 percent.
B. 6 percent.
C. 10 percent.
D. 14 percent.
B. 6 percent.
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How is the Solow residual measured? What problems arise in its measurement when resource utilization varies over the business cycle? What implications do these measurement issues have for evidence supporting the RBC model?
What will be an ideal response?
The Double Dividend Effect requires
A. double credit on airline miles. B. two different taxes. C. no taxes on stock dividends. D. Pigouvian taxes.
When a permanent negative supply shock hits the economy ________
A) in the long-run, output is permanently lowered whether the central bank reacts or not B) inflation decreases in the short-run C) there is no long-run effect on inflation whether the central bank reacts or not D) all of the above E) none of the above
An uninformed party can use ________ to learn about the information held by the informed party
A) signaling B) screening C) a warranty D) educational attainment