If you have $5,000 in wealth and the price level decreases by 20 percent, then
A) the $5,000 will buy fewer goods and services.
B) the $5,000 will buy more goods and services.
C) the real value of the $5,000 decreases.
D) the real value of the $5,000 remains constant.
B
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If an increase in the level of money supply leads to a proportionate increase in prices with no effect on real variables ,we say that
A) the Fisher relationship holds. B) money is neutral. C) money is superneutral. D) money is a medium of exchange.
If a bond sells for $2,000 and pays $200 per year in interest, the interest rate on the bond is
A) 20 percent. B) 10 percent. C) 5 percent. D) 100 percent.
A union could raise wages without causing unemployment of union members if it can increase demand for union labor. How might this goal be achieved?
What will be an ideal response?
Assume that the central bank purchases government securities in the open market. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and GDP Price Index falls. b. The real risk-free interest rate rises, and GDP Price Index falls. c. The real risk-free interest rate and GDP Price Index remain the same. d. The real risk-free interest rate falls, and GDP Price Index rises. e. There is not enough information to determine what happens to these two macroeconomic variables.