Assume that a lender had lent $2,500 at the rate of 12 percent per annum for a year, expecting an inflation rate of 3 percent. However, at the end of the year rate of inflation increased to 5 percent. The purchasing power of the lender:
a. will decline by $51.78
b. will appreciate by $51.78
c. will decline by $211.54
d. will appreciate by $211.54
A
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Deadweight loss measures the inefficiency as the loss of
A) consumer surplus only. B) consumer surplus minus producer surplus. C) consumer surplus plus producer surplus. D) producer surplus only.
According to the quantity theory of money:
a. the velocity of money is highly variable. b. the money supply directly affects real GDP. c. the money supply inversely affects velocity. d. real GDP increases as the price level increases. e. P = MV/Q.
Which of the following institutions within the Federal Reserve System determines how many government securities the Fed should buy or sell on a given day?
A. the Federal Reserve Bank of Chicago's Board of Trade B. the Federal Reserve Bank of New York's Trading Desk C. Federal Advisory Committee D. the Board of Governors
When economists say goods are scarce, they mean:
a. consumers are too poor to afford the goods and services available. b. consumers are unwilling to buy goods unless they have very low prices. c. goods are generally freely available from nature in most countries. d. the desire for goods and services exceeds our ability to produce them with the limited resources available.