Negative inflation rates benefit lenders because
A. the real interest rate is negative.
B. the nominal interest rate is negative.
C. the nominal interest rate is positive.
D. the real interest rate is positive.
Answer: D
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Suppose there are two small island countries: Avarice, which is populated by people who are completely self-interested, and Altruism, which is populated by people who have adopted social norms of generosity and cooperation. Commitment problems will be:
A. largely avoided on both islands. B. largely avoided in Altruism, but prevalent in Avarice. C. largely avoided in Avarice, but prevalent in Altruism. D. prevalent on both islands.
Refer to Figure 17-9. Fed Chairman Paul Volcker's response to the ________ of the late 1970s is depicted in the figure above as a movement from C to D to A
A) appreciation of the dollar B) deflation C) high inflation D) high unemployment
The analysis of a progressive tax is very similar to that of a proportional tax.
A. True B. False C. Uncertain
The more broadly a good is defined,
a. the more substitutes it has so the more elastic is its demand b. the fewer substitutes it has so the more elastic is its demand c. the more substitutes it has so the less elastic is its demand d. the fewer substitutes it has so the less elastic is its demand e. the more complements it has so the more elastic is its demand