People know that the inflation rate will decrease from 7 percent to 3 percent. As a result
A) the nominal interest rate falls by 4 percentage points.
B) the nominal interest rate is constant.
C) the nominal interest rate rises by 4 percentage points.
D) the nominal interest rate equals 3 percent.
A
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Economic freedom by its nature suggests
A) minimal government interference. B) a lack of laws and regulations. C) economic anarchy. D) zero government.
Central banks that are relatively free from political interference, and are thus ________ likely to be time inconsistent, generally have a ________ record of achieving low inflation
A) more, better B) more, worse C) less, better D) less, worse
Which of the following observations is true?
a. State governments are the shareholders of the Fed. b. The Fed chairman is appointed for a ten year term. c. FOMC decisions largely determine short-term interest rates. d. Member banks proportionately share all of Federal Reserve's profits.
If there is no revenue from money growth, then the government's budget constraint without borrowing is:
a. Gt + Vt = Tt. b. Gt = Vt - Tt c. Gt = Vt + Tt. d. all of the above.