Suppose the current one-year interest rate is 3%, and financial markets expect the one-year interest rate next year to be 5%. Given this information, the yield to maturity on a two-year bond will be approximately
A) 4%.
B) 6%.
C) 8%.
D) 12%.
E) none of the above
A
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Suppose that an economy is initially producing at the full-employment level of output. Now suppose there is a reduction in the money supply. Other things being equal we can expect
A) demand-side inflation. B) supply-side inflation. C) deflation. D) cost-pull inflation.
A summary of a country's economic transactions with foreign residents and governments is called the
A) current account balance. B) capital account balance. C) balance of trade. D) balance of payments.
Which of the following is a positive statement?
a. An unemployment rate of 7 percent or higher is a national disgrace. b. Unemployment is a less important problem than inflation. c. When the national unemployment rate is 7 percent, the unemployment rate for inner-city youth is often close to 40 percent. d. Unemployment and inflation are equally important problems. e. An inflation rate of 7 percent is too high.
If there is an excess supply of a good on the market,
a. the price is lower than the equilibrium price b. the quantity demanded exceeds the quantity supplied c. the price will fall d. there is a shortage of the good e. the price will rise