One cost of unanticipated inflation is
A) nominal income falls below real income. B) both lenders and borrowers lose.
C) arbitrary redistributions of income. D) people cannot repay their debts.
C
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Policy is conducted via discretion if policymakers
a. announce and achieve a constant money supply. b. announce and achieve a constant interest rate. c. are free to respond to changes in economic conditions on a case-by-case basis. d. announce in advance how they will respond to changes in economic conditions.
Indifference curves:
a. may sometimes intersect. b. are contour lines only of a linear utility function. c. are convex if the utility function is quasi-concave. d. shift when prices change.
The kinked demand curve is an attempt to model strategic behavior
Indicate whether the statement is true or false
The main purpose of federal deposit insurance is to
A. permit the Federal Reserve to control the money supply. B. prevent borrowers who are likely to default on their loans from getting loans in the first place. C. prevent bank panics. D. put savings and loan associations on an equal competitive footing with commercial banks.