An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of
a. positive economics
b. normative economics
c. negative economics
d. a simplifying assumption
e. microeconomic analysis
A
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If lenders think that a particular borrower might default, they will demand a:
A. higher interest rate to make it worth taking that risk. B. lower interest rate to make it worth taking that risk. C. higher interest rate to decrease the amount of risk incurred. D. lower interest rate to decrease the amount of risk incurred.
For a perfectly competitive firm, marginal revenue equals average revenue because the
a. firm's supply curve is horizontal. b. industry's demand curve is horizontal. c. firm's demand curve is horizontal. d. industry's supply curve is horizontal.
According to the equation of exchange, if real output and the money supply stay the same and the price level increases:
A. nominal GDP remains constant. B. the velocity of money has to increase. C. the velocity of money has to decrease. D. the real GDP had to rise.
The problem of lags suggests that monetary policy should
A) respond swiftly to statistical reports of economic conditions in the recent past. B) respond to conditions expected to exist in the future. C) stagger its implementation of policies so that there will be an ongoing effect on the economy. D) not respond to changing economic conditions in the economy but instead rely on the economy's self correcting mechanism.