If inflation does not adjust rapidly in the short run, then when the Federal Reserve increases the nominal interest rate, the real interest rate in the short run will ________.
A. decrease
B. be determined by saving and investment decisions.
C. increase
D. not change
Answer: C
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The textbook's example of urban traffic flows demonstrates the notion of single-minded pursuits of one's own best interest
A) creates traffic jams. B) interferes with achievement of the public interest. C) produces social cooperation under appropriate rules of the road. D) will not work to any single person's advantage. E) will work to some people's advantage but will harm the vast majority.
If there is an excess supply of money in the economy,
a. there is also an excess demand for money b. there is also an excess demand for bonds c. there is also an excess supply of bonds d. the interest rate will rise e. the Fed must intervene to restore equilibrium
You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?
a. The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. b. Your employer is required by law to pay $300 to match the $300 deducted from your check. c. This type of tax is an example of a payroll tax. d. All of the above are correct.
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.