Inflation has no effect on an economy's well-being if
A) it is universally and accurately anticipated.
B) relative prices are unaffected.
C) the nominal rate of interest for both savers and borrowers rises by an amount just equal to the rate of inflation.
D) all of these
D
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The required reserve ratio is 10 percent and Charlie deposits $3,000 in her checking account. The bank must
A) decrease reserves by $300. B) decrease reserves by $3,000. C) increase reserves by $3,000. D) increase reserves by $300. E) not change its reserves until Charlie decides to withdraw her funds.
An increase in housing starts, typically due to __________ interest rates, is often thought to precede __________
A) rising; an expansion B) rising; a recession C) falling; an expansion D) falling; a recession
If market participants have rational expectations,
A) they can assume the stock prices they observe represent the fundamental values of those stocks B) they know to purchase stocks that are priced below their fundamental value C) they will achieve higher returns than those with adaptive expectations D) they can earn above-average returns on their investments
Because of transactions which take place in the underground economy, the:
a. GDP calculation tends to overstate the actual value of goods sold in the economy. b. GDP calculation tends to accurately portray the value of goods sold in the economy. c. GDP calculation tends to understate the actual value of goods sold in the economy. d. value of the GDP calculation will be equal to the value of the national income calculation. e. value of the GDP calculation through the expenditure approach will be greater then the value calculated through the income approach.