When inflation rises, people
a. make less frequent trips to the bank and firms make less frequent price changes.
b. make less frequent trips to the bank while firms make more frequent price changes.
c. make more frequent trips to the bank while firms make less frequent price changes.
d. make more frequent trips to the bank and firms make more frequent price changes.
d
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A firm invests in a new machine that costs $2,000 a year but is expected to produce an increase in total revenue of $2,200 a year. The current real rate of interest is 8%. The firm should
A. undertake the investment, because the expected rate of return of 9% is greater than the real rate of interest. B. not undertake the investment, because the expected rate of return of 7% is less than the real rate of interest. C. undertake the investment, because the expected rate of return of 12% is greater than the real rate of interest. D. undertake the investment, because the expected rate of return of 10% is greater than the real rate of interest.
In the foreign exchange market, a change in which of the following will result in a movement along the demand curve for U.S. dollars?
A) the exchange rate B) the U.S. interest rate C) the interest rate in the foreign country D) the expected future exchange rate
The cyclical unemployment rate is 0 when the overall unemployment rate is
A. 15. B. 10. C. 5. D. 3. E. 0.
Suppose the average price of a Big Mac in the United States is $3.50 while in Japan the average price is 400 yen. If the market exchange rate is that 1 dollar is exchanged for 100 yen, the purchasing power parity model of exchange-rate determination suggests that
A. the price of a Big Mac in Japan will rise. B. the yen is overvalued. C. the dollar will depreciate against the yen. D. the yen value is about correct.