Unanticipated restrictive monetary policy would tend to cause
a. real interest rates to rise.
b. the exchange rate value of the dollar to fall (the dollar to depreciate).
c. loans to become more available for small businesses.
d. asset prices to rise.
A
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Suppose you paid $500,000 for an asset. You hold the asset for five years. The interest rate that you get for the asset is 10%. Assume the tax rate on capital gains is 20%.
(A) If capital gains are taxed only when the asset is realized, how much will you have earned on the asset? (B) Suppose that capital gains are taxed annually instead of at realization. How much will you have earned on the asset? (C) How big is the difference in the two taxing schemes?
Expenditures that are directly included in GDP accounts include
a. the value of housework done by householders b. the selling of illegal drugs c. playing tennis with friends on a Sunday afternoon d. casual labor in sweatshops that is unreported e. going to a Dodgers-Expos game on your day off
Explain how usury laws can distort the market for funds. What is the most likely result if a usury law is passed and enforced?
What will be an ideal response?
"If the amount of product differentiation in a monopolistically competitive industry is very small, the outcome in that market will not be very different than if it were a perfectly competitive industry." Explain.
What will be an ideal response?