Which of the following is an example of the wealth effect during a period of inflation?
A. A firm receives a fixed price for the services it sells while the price level is rising
B. You hold money in a savings account that earns 5 percent interest while the price level doubles
C. Your income stays constant while the price level doubles
D. You pay for utilities that are becoming more expensive as the price level is rising
B. You hold money in a savings account that earns 5 percent interest while the price level doubles
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Because Federal Reserve Notes (paper currency) are legal tender,
A) U.S. creditors must accept them in payment of debts. B) U.S. workers must accept them as payment for labor services. C) U.S. firms must accept them as payment for goods and services. D) All of he above are correct.
A situation in which the Fed's target interest rate has fallen as far as it can fall is sometimes described as a
a. liquidity preference. b. liquidity trap. c. open-market trap. d. interest-rate contraction.
Structural unemployment may result from all of the following factors EXCEPT
A. union wage contracts. B. improved college education. C. a higher minimum wage. D. welfare and unemployment benefits.