A temporary supply shock that raises prices will cause the real interest rate to
A) rise in both the short and long runs.
B) rise in the short run but not in the long run.
C) fall in both the short and long runs.
D) fall in the short run but not in the long run.
B
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According to research, after the Tax Reform Act of 1986, the effective marginal tax rate on equipment has
A. decreased substantially. B. stayed basically the same. C. increased. D. decreased slightly.
Keynes argued that if the economy is in a severely depressed state then __________ is constant
A) real GDP B) the price level C) velocity D) nominal GDP
The principal-agent problem of ownership vs. control of the corporation tends to get worse when
A) stock in a corporation is held exclusively by a small number of people who control the company's day-to-day operations. B) stock in the company is tightly held, but there are some "outsider" stockholders. C) stock in the company is very diffusely held, with no individual or group having control over a large block of stock. D) managers have profit-sharing schemes as part of their incentive package. E) managers focus on maximizing the firm's profits, rather than the firm's market share.
If a country moves from fixed to flexible exchange rates, its macroeconomic policy
A) is no longer restricted. B) is restricted, as it can only use fiscal policy to achieve its economic goals. C) is restricted, as it can only use monetary policy to achieve its economic goals. D) must follow policy directives from the IMF.