If the nominal interest rate is high and rising, a possible cause is
A) increased lending activity.
B) a rising inflation rate.
C) a falling real interest rates.
D) increased government borrowing.
Answer: B) a rising inflation rate.
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A network externality occurs when
A) the usefulness of a good is affected by celebrities who use the good. B) there is production cost savings from being networked with buyers. C) the usefulness of a good is affected by how many other people use the good. D) there is production cost savings from being networked with suppliers.
The preferred habitat theory of the term structure is closely related to the
A) expectations theory of the term structure. B) segmented markets theory of the term structure. C) liquidity premium theory of the term structure. D) the inverted yield curve theory of the term structure.
The classical view that money does not matter is sometimes described by the saying, "Money is a
a) camouflage." b) mask." c) veil." d) smoke screen."
John is currently spending all of his income. For the last unit of Good X consumed John gets 20 utils and for the last unit of Good Y consumed he gets 10 utils. The price of Good X is $2. The price of Good Y is $5. If John wants to maximize his utility
he should A) continue to purchase the same amount of Good X and Good Y. B) increase the consumption of Good X and decrease the consumption of Good Y. C) decrease the consumption of Good X and increase the consumption of Good Y. D) decrease the consumption of Good X and decrease the consumption of Good Y.