Which of the following represents the Lucas supply function?
A. Y = f(Pe + P)
B. Y = f(P - Pe)
C. Y = f(P + Pe)
D. Y = f(Pe - P)
Answer: B
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All bonds that will not be held to maturity have interest rate risk which occurs because of the change in the price of the bond as a result of
A) interest-rate changes. B) changes in the coupon rate. C) default of the borrower. D) changes in the asset's maturity date.
Governments can deal with externalities through the use of
a. subsidies. b. taxes. c. price controls. d. All of the above are correct.
A non-policy reason for the reduction in the natural rate of unemployment is the
a. expansionary nature of monetary policy. b. aging of the U.S. labor force. c. decline in interest rates. d. growing federal budget surplus.
Other things being equal, a higher saving rate
A. is associated with a decline in the rate of growth of the population. B. means higher standards of living in the future. C. leads to higher interest rates. D. means higher standards of living today.