A public debt that is owed to foreigners can be burdensome because
A. the payment of interest will necessarily have a deflationary effect on prices in the paying nation.
B. the payment of interest will conflict with a nation's foreign aid programs.
C. the payment of interest reduces the volume of goods and services available for domestic uses.
D. foreign interest rates are persistently higher than domestic interest rates.
Answer: C
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The nominal interest rate will be less than the real interest rate when
A) the rate of inflation is negative. B) the real interest rate is negative. C) the rate of inflation is positive and increasing. D) the rate of inflation is positive but decreasing.
Based on the Taylor rule, in the 1980s, monetary policy was
A) too tight. B) too easy. C) just about right. D) too tight in the first half of the decade and too easy in the second half.
If two goods are substitutes, their cross-price elasticity will be
a. positive. b. negative. c. zero. d. equal to the difference between the income elasticities of demand for the two goods.
What is the percentage of income received by the lower three quintiles on line J?
