When the actual inflation rate turns out to be greater than the expected inflation rate, who gains—the borrower or the lender—and who loses? Explain why
What will be an ideal response?
The borrower gains because he pays back the loan in cheaper dollars—dollars that have lost more purchasing power than was expected. The lender loses because she receives dollars that have lost more purchasing power than was expected.
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For the coordination failure model to work, it must be the case that the aggregate labor demand curve must be
A) upward sloping and steeper than the labor supply curve. B) upward sloping and flatter than the labor supply curve. C) downward sloping and steeper than the labor supply curve. D) downward sloping and flatter than the labor supply curve.
Typically, total utility derived decreases as more of a good is consumed
a. True b. False Indicate whether the statement is true or false
Policy makers find that creating inflation is much more difficult than creating disinflation because expectations begin to change as inflation takes hold
a. True b. False Indicate whether the statement is true or false
Number of workersUnits of output0012525539541255150Table 8.2Refer to Table 8.2, which gives a firm's production function. Assume that all non-labor inputs are fixed. Diminishing returns set in with the addition of the:
A. third worker. B. fourth worker. C. fifth worker. D. sixth worker.