For a borrower, an increase in the real interest rate
A) definitely reduces current consumption and increases future consumption.
B) reduces current consumption and has an uncertain effect on future consumption.
C) has an uncertain effect on current consumption and increases future consumption.
D) has an uncertain effect on both current and future consumption.
B
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Fractional reserve banking began
A) in ancient Greece. B) in the early nineteenth century. C) in the early twentieth century. D) in the Middle Ages.
Oligopolies would like to act like a
a. duopoly, but self-interest often drives them closer to the perfectly competitive outcome. b. competitive firm, but self-interest often drives them closer to the duopoly outcome. c. monopoly, but self-interest often drives them to charge a higher price than would be charged by a monopoly. d. monopoly, but self-interest often drives them closer to the perfectly competitive outcome.
Which statement is false?
A. When two countries trade, both gain from the trade. B. In international trade some countries are winners and others are losers. C. For most of the 20th century we had a positive balance of trade. D. None of these statements are false.
According to the Lucas critique, if past increases in the short-term interest rate have always been temporary, then
A) the term-structure relationship using past data will then show only a weak effect of changes in the short-term interest rate on the long-term rate. B) the term-structure relationship using past data will show no effect of changes in the short-term interest rate on the long-term rate. C) one cannot predict the term-structure relationship as it depends on expectations. D) the term-structure relationship using past data will nevertheless show a strong effect of changes in the short-term interest rate on the long-term rate because of a change in the way expectations are formed.