What problems can high inflation rates cause for the economy?
What will be an ideal response?
The problems that inflation causes for the economy include the loss of purchasing power of money, menu costs, and an unintended redistribution of income.
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Which explanation for persistent unemployment used by the original Keynesian model is no longer needed in the new Keynesian model?
A) shifting IS curve B) a fixed nominal wage C) aggregate supply curve is a function of the nominal wage D) rigid wages and prices
A market system does not operate based on self-interest
a. True b. False Indicate whether the statement is true or false
When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund, U.S. net capital outflow
a. increases because an American company makes a portfolio investment in Germany. b. declines because an American company makes a portfolio investment in Germany. c. increases because an American company makes a direct investment in Germany. d. declines because an American company makes a direct investment in Germany.
What is the present value of four payments of $5,000 at the end of each of the next four years if the interest rate is 2 percent?
A) $9,430.50 B) $20,000.00 C) $19,038.64 D) $18,358.12