Which statement is true?
A. Only the poor are hurt by inflation.
B. During times of inflation the nominal interest rate is considerably higher than the real interest rate.
C. People living on fixed incomes are generally helped by inflation.
D. None of the statements are true.
B. During times of inflation the nominal interest rate is considerably higher than the real interest rate.
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If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of money would be (assume that citizens prefer to keep 10% of their money)
A) 100/0.25 which is 400. B) (100 )(1.35 ) which is 540 0.25. C) (100 )(1.1 ) which is approximately 314 0.35. D) (100 )(1.35 ) which is approximately 386 0.35.
Which curve is analogous to the monopsonist's demand curve?
A) ME B) AE C) MV D) MC
Some argue that "financing an investment with your own personal funds is always less expensive than borrowing the funds from a bank because it's an interest-free loan.". To an economist, this argument
a. is true because borrowed funds involve an explicit cost, while use of one's own funds involves only an implicit cost b. ignores the opportunity cost associated with using one's own funds c. is false because the bank can always match the interest rate offered on the loanable funds market d. is true only if the investment generates less revenue than the revenue generated by the interest-bearing deposit in the bank e. ignores the cost of sacrificing present consumption
Many personal finance magazines such as Money and Smart Money routinely give advice as to which stocks to buy. Should you take their advice?