In the long run, the unemployment rate
A) is equal to the expected unemployment rate.
B) is zero.
C) can take on any value.
D) is equal to the natural unemployment rate.
E) must be equal to the expected inflation rate.
D
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A bank has reserves of $50, deposits of $100, loans of $20, and government securities of $30. Assume the desired reserve ratio is 20 percent
a. What are the bank's assets and what are its liabilities? b. How much does the bank have in excess reserves? c. What can the bank do with its excess reserves that will affect the quantity of money?
How do we determine whether a firm has maximized profits?
What will be an ideal response?
In lesser-developed countries (LDCs), interest rates are usually much higher than in developed economies. A reason that is consistent with your understanding of interest rate determination is
a. people in LDCs save at a much higher rate b. there are fewer businesses in LDCs, so demand is lower c. consumers in LDCs are less willing to postpone present consumption d. the opportunity cost of saving in LDCs is lower because of the low levels of income of most of the population e. the marginal productivity of capital in the LDCs is likely to be lower
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and current international transactions balance in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium. a. The real risk-free interest rate remains the same and current international transactions balance becomes more negative (or less positive). b. The real risk-free interest rate falls and current international transactions balance becomes more positive (or less positive). c. The real risk-free interest rate and current international transactions balance remain the same. d. The real risk-free interest rate rises and current international transactions balance remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.