If an economy experiences deflation, the real interest rate
A) will be greater than the nominal interest rate.
B) will be equal to the deflation rate, so long as the nominal interest rate is positive.
C) will be negative when the nominal interest rate is positive.
D) will be less than the nominal interest rate.
A
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When there is a recessionary gap, capital and labor resources are:
A. decreasing in number. B. not being fully utilized. C. producing beyond their capacity. D. misallocated.
The permanent income hypothesis implies that the effect of a temporary tax cut on economic activity
A) is greater than the effect of a permanent tax cut. B) is the same as the effect of a permanent tax cut. C) is smaller than the effect of a permanent tax cut. D) can be greater than or smaller than the effect of a permanent tax cut, depending on how the tax cut affects the government.
Pollution is a form of market failure called a public externality
a. True b. False
Which of the following is an example of physical capital?
a. the available knowledge on how to make semiconductors b. a taxi-cab driver's knowledge of the fastest routes to take c. bulldozers, backhoes and other construction equipment d. All of the above are correct.