Inflation is basically
What will be an ideal response?
a fall in the value or purchasing power of money.
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If you earn income now and expect to live off savings in the future, then a raise now will cause you to save more so long as consumption -- now and in the future -- is a normal good.
Answer the following statement true (T) or false (F)
A price maker is
A) a consumer who participates in an auction where she announces her willingness to pay for a product. B) a firm that is able to sell any quantity at the highest possible price. C) a person who actively seeks out the best price for a product that he or she wishes to buy. D) a firm that has some control over the price of the product it sells.
Which of the following is NOT an example of off-balance-sheet lending?
A) a swap B) a standby letter of credit C) a loan commitment D) a loan sale
Assume individuals consider only the short run effects of changes in future macro variables when forming expectations of future output and future interest rates. Suppose individuals expect the central bank to pursue a monetary expansion in the future. Given this information, we know with certainty that
A) current output and the current interest rate will both increase. B) current output will decrease. C) the current interest rate will decrease. D) the current output effects are ambiguous.