Given a central bank's monetary policy reaction curve, if inflation increases by 1% why would policymakers likely have to increase the nominal interest rate by more than the increase in the expected rate of inflation?
What will be an ideal response?
The higher rate of inflation will have the policymakers wanting to raise the real interest rate. Since the real interest rate is the nominal interest rate less the rate of inflation, raising the nominal interest rate by the same amount that the rate of inflation has increased may not raise the expected real interest rate.
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When Trina can afford bundles A and B but not C, she purchases bundle A. When Trina can afford bundles A and C, but not B, she purchases bundle C
We can conclude her preference ordering of the three bundles is (in order from most preferred to least) A) C, A, B. B) B, A, C. C) A, C, B. D) A, B, C.
Externalities can be produced by ____________, as well as ____________.
A. individuals; firms B. market prices; market incomes C. oceans; streams D. none of these answer options are correct.
When maximizing economic growth is a country's goal it:
A. creates a perfect correlation to happiness, if the money is allocated fairly. B. everyone in the economy will be better off if it obtains its goal. C. may work in opposition to the country's happiness in terms of satisfaction gained from leisure. D. increases the correlation to the country's happiness, because more money makes people happier.
Which one of the following is a feature of all investments?
A. The future payments are typically risky B. The periodic payments they provide are regular C. They typically are short term D. They give the investor a stream of future payments, not just one payment