If there is inflation and we compare the changes in a nominal variable over time versus its real counterpart, such as the nominal wage rate versus the real wage rate, we find that the
A) two increase at about the same rate because of inflation.
B) real wage rate increases faster because of inflation.
C) nominal wage rate increases faster because of inflation.
D) two decrease at about the same rate because of inflation.
E) two change at a rate that does not depend on the inflation rate.
C
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Explain what occurs in the capital market
What will be an ideal response?
Assuming no change in the nominal exchange rate, how will a higher rate of inflation in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)
A) The real exchange rate will rise. B) The real exchange rate will be unaffected. C) The real exchange rate will fall. D) The impact on the real exchange rate cannot be predicted.
Which of the following international organizations do globalization critics claim is serving the interests of large multinational corporations?
a. NATO b. The World Bank c. The Fed d. The United Nations e. The International Labor Organization
If there is a leftward shift of the money demand curve, which of the following should the Fed do if it wants to keep the price level stable?
a. Lower its interest rate target b. Sell bonds in the open market c. Wait, since the price level does not usually change when the money demand curve shifts d. Raise its interest rate target e. Buy bonds in the open market