Consider an economy that has the following monetary data. The monetary base and the money supply are expected to grow at a constant rate of 20% per year. Inflation and expected inflation are 20% per year
Suppose that bank reserves and currency pay no interest, all currency is held by the public, and bank deposits pay no interest. What is the cost to the public of the inflation tax? A) $60
B) $140
C) $190
D) $200
D
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Refer to Figure 2-10. If the economy is currently producing at point E, what is the opportunity cost of moving to point B?
A) 26 thousand forks B) 60 thousand spoons C) 0 spoons D) 20 thousand forks
What is the Nash equilibrium of this game?
a. Cheat, Cheat b. Not cheat, Not cheat c. Sam cheats, Sarah doesn't d. Sarah cheats, Sam doesn't
The extent of money expansion will be: a. greater if banks hold on to excess reserves
b. greater if private individuals hold on to cash. c. greater if banks hold on to excess reserves but less if private individuals hold on to cash. d. less if banks hold on to excess reserves but greater if private individuals hold on to cash. e. less if banks hold on to excess reserves or private individuals hold on to cash.
In the classical model, an increasing demand for labor will
a. cause an expansion with higher employment and a higher real wage. b. cause a shortage of labor because the labor market always clears. c. cause a recession with lower employment and a lower real wage. d. cause a recession because wages are fixed in the short run. e. cause an expansion with lower employment and a higher real wage.