In an inflationary atmosphere that everyone anticipates will persist, lenders will
A. desire a higher nominal interest rate to protect against the inflation.
B. tend to see the real rate of interest increase, particularly if the inflation is unforeseen.
C. desire a lower nominal interest rate to increase the real rate.
D. have the real rate of interest guaranteed by the Federal Reserve Board.
Answer: A
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What is the general principle of price discrimination?
When new firms choose to enter monopolistically competitive markets: a. there must be little diversity of products in the market
b. they are guaranteed economic profits upon entry. c. some firms in the market must be making economic profits. d. the demand curve faced by an established firm will shift to the right as a result.
Suppose each of the following rows represents the choice faced by policy makers given the current set of U.S. institutions and technology. What is the opportunity cost of reducing unemployment from 8 percent to 4 percent?UnemploymentInflation103846557410
A. 4 percentage points of unemployment B. 4 percentage points of inflation C. 6 percentage points of inflation D. 6 percentage points of unemployment
A flight to quality should result in the:
A. yield on corporate bonds falling and the price of U.S. Treasury Securities rising. B. yield on U.S. Treasury Securities falling and the price of corporate bonds rising. C. price of U.S. Treasury Securities rising and the price of corporate bonds rising. D. yield on U.S. Treasury securities falling and the price of corporate bonds falling.