Falling interest rates cause the market value of previously issued bonds to
a. rise.
b. fall.
c. remain unchanged.
d. increase during periods of inflation but decline during periods of deflation.
A
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Barbara buys the same market basket each week and spends $60 on it. This week Barbara brought $60 to the store but could not buy her usual market basket. One explanation for this is ________.
A. she became unemployed B. there was an increase in real GDP C. the GDP price index has decreased D. there was inflation
Refer to Scenario 9.1. The socially optimal outcome occurs when Sheb places ________ sheep on the commons and Monty places ________ sheep on the commons
A) 4; 4 B) 4; 5 C) 5; 4 D) 5; 5
Interest is not the price of money, which can be seen when interest rates rise rapidly in an economy where
A) barter exchange displaces money exchange. B) people lose interest in money. C) the demand for money increases rapidly. D) the supply of money increases rapidly.
Suppose that the ratio of retirees to working citizens is currently 1 to 5, meaning that there are 5 working people for every retiree. Suppose that in thirty years the ratio will change to 1 to 2. If benefits remain the same, what will happen to the tax rate assuming retirees are provided benefits in a pay-as-you-go system? How much would benefits decrease if the tax rate remained the same?
What will be an ideal response?