If the inflation rate is zero, then the nominal and real interest rate are the same
a. True
b. False
Indicate whether the statement is true or false
True
You might also like to view...
Based on the figure above, the aggregate demand curve will shift from AD0 to AD1 when
A) the Federal Reserve lowers the interest rate. B) government expenditure decreases. C) the price level falls. D) the price level rises. E) potential GDP increases.
An important reason why economies at an early stage of development tend to operate inefficiently is
A) they tend to be dominated by the agricultural sector, where productivity is usually low. B) they tend to have authoritarian governments that stifle innovation. C) they tend to be plagued by superstitious beliefs that stifle innovation. D) the high transactions costs associated with barter.
The Federal Reserve econometric model estimates that it takes __________ for crowding out to reduce the impact of a 1 percent increase in government spending, with the money supply held constant, to zero
A) 2 years B) 3 years C) 4 years D) Crowding out never reduces the impact to zero.
In the figure below, AB is the production-possibility curve of Canada. The line PQ shows the price ratio of one bushel of wheat/bale of cotton. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I1 and I2 are two of the community indifference curves of Canada. After Canada engages in free trade, it will:
A. produce at point S1 and consume at point C1. B. produce at point S1 and consume at point C0. C. produce and consume points not labeled in the graph. D. produce and consume at point C0.