Which of the following will increase interest rates in the short run?
a. an decrease in reserve requirements
b. open market sales by the Fed
c. a decrease in real GDP
d. an decrease in the price level
b
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Unanticipated inflation will insure that
A) homeowners with outstanding mortgage balances are hurt. B) homeowners with outstanding mortgage balances are benefited. C) creditors gain, debtors lose. D) none of the above
An antigrowth view states that there may be a significant trade-off between productivity and:
A. economies of scale. B. employment. C. education. D. the quality of life.
Suppose the real interest rate is 4% and the expected inflation rate is 3%. If the money supply increases by 10% and output, the real interest rate, and the expected inflation rate are unchanged, then the price level increases by
A. 7%. B. 4%. C. 3%. D. 10%.
Why, in the labor market, are contracts often designed to include a variable salary component that is tied to some measure of performance?
A. Most people are risk-averse and thus variability in their compensation leads to higher total utility. B. These contracts tend to attract employees with the lowest probability of switching jobs. C. Firms use such contracts to differentiate between high- and low-quality workers. D. Such contracts are considered the fairest to employees under fair labor standard laws.