Which of the following will most likely cause an increase in the quantity of money demanded?
A. a decrease in nominal income
B. an increase in nominal income
C. a decrease in the interest rate
D. an increase in the interest rate
Answer: C
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Loans are examples of a bank's
A) balance sheet. B) assets. C) liabilities. D) net worth.
Refer to Table 2-17. What is James's opportunity cost of making a wagon?
A) 2 tricycles B) 1/2 of a tricycle C) 3/4 of a wagon D) 1/2 of a wagon
Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?
a. The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. b. The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. c. Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient. d. There will be no shortages under the first-come first-serve basis of allocation. e. A random process of allocation is fair in the sense that everyone gains and there are no losers.
A central bank pledges to reduce the inflation rate from 10% to 3%. People reduce their inflation expectations to 5%, but the central bank reduces inflation to 3%. What happens to the unemployment rate?