Price tags reduce transaction costs in countries where people's time is more valuable
Indicate whether the statement is true or false
T
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If the nominal interest rate is 5 percent and there is no inflation, _____
a. the real interest rate exceeds 5 percent b. the real interest rate is less than 5 percent c. the real interest rate is 5 percent d. there is not enough information to determine the real interest rate e. the real interest rate is zero
The Fed increases the reserve requirement, but it wants to offset the effects on the money supply. Which of the following should it do?
a. sell bonds to increase reserves b. sell bonds to decrease reserves c. buy bonds to increase reserves d. buy bonds to decrease reserves
If short-run equilibrium output equals 10,000, the income-expenditure multiplier equals 10, and potential output (Y*) equals 9,000, then government purchases must ________ to eliminate any output gap.
A. decrease by 100 B. increase by 1,000 C. decrease by 1,000 D. increase by 100
To predict the effects of a tax cut on consumption spending, economists must have some estimate of the
A. income effect. B. substitution effect. C. relative price effect. D. marginal propensity to consume.