When the anticipated rate of inflation declines, the real rate of interest
A. increases exponentially.
B. is not affected.
C. decreases.
D. increases.
Answer: D
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Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely
A) decrease interest rates. B) not change interest rates. C) decrease the inflation rate. D) increase interest rates.
When Norway unilaterally fixes its exchange rate against the euro and leaves the krone
A) free to float against the non-euro currencies, it is able to keep at least some monetary independence. B) free to float against the non-euro currencies, it is unable to keep at least some monetary independence. C) free to float against the non-euro currencies, it is able to keep its monetary independence. D) run by crawling peg against the non-euro currencies, it is able to keep at least some monetary independence. E) fixed against the non-euro currencies, it is unable to keep its monetary independence.
The peak phase of the business cycle represents
A) a temporary maximum output level of Gross Domestic Product (GDP). B) an increase in foreign investment. C) a labor surplus. D) falling prices.
The official rate of unemployment is based on a(n)
a. door-to-door survey. b. telephone survey. c. employer survey. d. payroll survey.