During the last tax year you lent money at a nominal rate of 6 percent. Actual inflation was 1 percent, but people had been expecting 1.5 percent . This difference between actual and expected inflation
a. transferred wealth from the borrower to you and caused your after-tax real interest rate to be 0.5 percentage points higher than what you had expected.
b. transferred wealth from the borrower to you and caused your after-tax real interest rate to be more than 0.5 percentage points higher than what you had expected.
c. transferred wealth from you to the borrower and caused your after-tax real interest rate to be 0.5 percentage points lower than what you had expected.
d. transferred wealth from you to the borrower and caused your after-tax real interest rate to be more than 0.5 percentage points lower than what you had expected.
a
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The price level influences aggregate supply in the___ run but not in the ___run.
Fill in the blank(s) with the appropriate word(s).
During the Vietnam War, monetary policy officials reacted to the increases in aggregate demand resulting from military expenditures by:
A. dramatically slowing money growth. B. shifting the monetary policy reaction curve to the left. C. not shifting the monetary policy reaction function. D. keeping the same inflation target and raising the real interest rates.
A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be ________
A) efficient only if the trout farmer owns the river B) inefficient if the farming operation owns the river C) efficient if either the farming operation or the trout farmer own the river D) always inefficient
Which of the following statements is correct?
a. Assuming that explicit costs are positive, economic profit is greater than accounting profit. b. Assuming that implicit costs are positive, accounting profit is greater than economic profit. c. Assuming that explicit costs are positive, accounting profit is equal to economic profit. d. Assuming that implicit costs are positive, economic profit is positive.