If a borrower arbitrarily gains purchasing power as the result of a particular loan agreement, then
A. actual inflation was greater than expected inflation.
B. actual inflation was equal to expected inflation.
C. actual inflation was less than expected inflation.
D. the real interest rate was greater than the nominal interest rate.
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. B; C C. B; A D. D; B
When the government lowers income taxes, consumption is ______________, causing a __________ the AD curve
A) stimulated; rightward shift of B) stimulated; movement down along C) reduced; leftward shift of D) reduced; movement up along
The demand for a product is inelastic with respect to price if:
A. consumers are largely unresponsive to a per unit price change. B. the elasticity coefficient is greater than 1. C. a drop in price is accompanied by a decrease in the quantity demanded. D. a drop in price is accompanied by an increase in the quantity demanded.
Refer to the graph shown for a small country that is a price taker internationally.Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, an import quota of 2,500 would cause domestic consumption to:
A. decrease from 7,400 to 6,100. B. increase from 6,100 to 7,400. C. increase from 2,400 to 3,600. D. decrease from 4,800 to 3,600.