High levels of inflation ________ the real value of money and, hence, ________ short-run equilibrium output.
A. reduce; increase
B. increase; decrease
C. increase; increase
D. reduce; decrease
Answer: D
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Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen. One can conclude that
A) the demand for tarot card readers has increased. B) the law of demand has been violated. C) the number of tarot card readers has increased. D) tarot card readers are deliberately charging high prices because they provide services for superstitious clients.
Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?
a. The real interest rate is the nominal interest rate times the rate of inflation. b. The real interest rate is the nominal interest rate minus the rate of inflation. c. The real interest rate is the nominal interest rate plus the rate of inflation. d. The real interest rate is the nominal interest rate divided by the rate of inflation.
An investor who purchases a call option is:
A. limited in his or her gain but is highly leveraged in losses. B. highly leveraged for both gains and losses. C. limited in both gains and losses. D. highly leveraged for a gain but is limited in losses.
The greater the degree of international capital mobility
A. the flatter is the FE curve. B. the steeper is the FE curve. C. the further to the right is the FE curve. D. the further to the left is the FE curve.