You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By 2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0 percent in 2009. Considering only your mortgage, is inflation good news or bad news for you?
A. bad news, because inflation hurts everyone
B. bad news, because it makes the real value of your mortgage payments increase
C. good news, because it makes the real value of your mortgage payments decrease
D. bad news, because it makes the nominal value of your mortgage payments increase
Answer: B
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In measuring the unemployment rate, part-time workers are ________, and discouraged workers are ________
A) included as employed; included as unemployed B) excluded; included as unemployed C) included as employed; excluded D) excluded; excluded E) included as unemployed if they are involuntary part-time workers; excluded
More consumption rather than investment leads to stagnant growth in developing countries.
Answer the following statement true (T) or false (F)
If prices have risen 220 percent since the base year, the current level of the CPI is
A. 20. B. 120. C. 220. D. 320.
Adverse selection and moral hazard problems arise when there is
A. symmetric information. B. too much information. C. asymmetric information. D. complete information