How is real seignorage revenue related to inflation? How does the quantity of real seignorage revenue change as inflation rises from zero to a positive level, to still higher levels?
What will be an ideal response?
Real seignorage revenue is the inflation rate times the level of real money balances. As inflation rises, real money balances decline. Initially, as inflation rises from zero, real seignorage revenue rises, because inflation rises more than real money balances fall. Real seignorage revenue continues to rise with higher inflation rates until it hits a point at which it begins to decline, because real money balances begin to fall more than inflation rises.
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The largest source of receipts for the federal government is
A) corporate income taxes. B) personal income taxes. C) capital gains taxes. D) Social Security taxes.
If demand is unit elastic, a price reduction will
a. increase revenues b. reduce revenues c. reduce quantity demanded d. have no effect on revenues e. increase profits
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building he owns and currently rents for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What is the minimum revenue he must earn per year in order for it to be worth his while to open
his sushi bar? a. $26,000 b. $66,000 c. $78,000 d. $52,000 e. $72,000
Which of the following is TRUE for a firm in the long run?
A) Variable costs will initially increase and then decrease. B) The law of diminishing marginal product holds. C) All costs are variable costs. D) Variable costs will equal marginal cost at all output levels.