The interest rate effect predicts that higher prices:
a. make it more expensive to borrow, leading to higher interest rates and less investment.
b. make people worse off by reducing the value of their wealth, leading them to save more and spend less.
c. decrease borrowing, leading to higher interest rates and less investment.
d. decrease borrowing, leading to lower interest rates and more investment.
e. increase borrowing, leading to higher interest rates and less investment.
e
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According to the above figure for a gasoline market, what happens when the price per gallon of gasoline jumps from $1 to $4?
A) A gasoline surplus is replaced by a gas shortage. B) The market moves from a shortage of 40 million gallons/day to a surplus of 50 million gallons/day. C) The market shortage is replaced by market equilibrium. D) A surplus of 40 million gallons/day results.
If a "break" occurs in the population regression function, then
A) inference and forecasting are compromised when neglecting it. B) an Augmented Dickey Fuller test, rather than the Dickey Fuller test, should be used to test for stationarity. C) this suggests the presence of a deterministic trend in addition to a stochastic trend. D) forecasting, but not inference, is unaffected, if the break occurs during the first half of the sample period.
For a number of years country A had inflation of 3% but for the last five years has had inflation of 6%. Country B had inflation of 4% for many years, but very recently inflation unexpectedly rose to 9%. Other things the same, in which of the countries would the higher inflation rate be more likely to reduce unemployment?
a. both country A and country B b. neither country A nor country B c. country A but not country B d. country B but not country A
Quotas and tariffs both serve the purpose of
A. lowering prices on imported goods. B. causing domestic producers to lose revenues. C. restricting foreign trade. D. increasing foreign trade.