If expected inflation were 5%, and the real interest rate was 3%, what sector would be worse off if the actual inflation rate turned out to be 2%
a. Businesses.
b. Laborers.
c. Both.
d. None.
.A
You might also like to view...
If real GDP equals aggregate planned expenditure, then inventories
A) fall below their target levels. B) rise above their target levels. C) equal their target levels. D) are either above or below their target levels depending on whether planned inventories are above or below their target levels. E) None of the above answers is necessarily correct because there is no relationship between inventories and aggregate planned expenditure.
The interest rate on Baa corporate bonds is ________, on average, than interest rates on Treasuries, and the spread between these rates became ________ in the 1970s
A) lower; smaller B) lower; larger C) higher; smaller D) higher; larger
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. What is Kate's profit maximizing output?
A. 2,000 B. 1,333.34 C. 1,000 D. 4,000
The proponents of rational expectations believe that
a. there will be a substantial time lag before people anticipate the eventual effects of a shift to a more expansionary macro-policy. b. macro-policies that stimulate demand and place upward pressure on the general level of prices will temporarily increase output and employment. c. the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal. d. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.