Other things equal, the higher the deviations from purchasing power, the lesser will be the arbitrage opportunities
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose the nominal annual interest rate on a 2-year loan is 8% and lenders expect inflation to be 5% in each of the two years. The annual real rate of interest is
A. 3%. B. 6%. C. 8%. D. 2%.
In the above figure, the slope across the arc between b and c is
A) 1/2. B) 2/3. C) 1. D) 2.
With respect to events like global warming some economists suggest using falling discount rates because
A) exponential discounting virtually gives no weight to (large) costs incurred far into the future. B) exponential discounting weights (large) costs incurred far into the future heavily. C) events far in the future do not affect us. D) we should not care about costs far in the future.
If the government wanted a tax to not burden consumers much, it would want to tax an industry with:
a. elastic supply and demand curves. b. inelastic supply and demand curves. c. inelastic supply and elastic demand. d. elastic supply and inelastic demand.