Constant dollars are dollars
A. issued by the Federal Reserve with values that fail to change even in the face of inflation or deflation.
B. corrected for general price level changes.
C. issued by the U.S. Treasury with values that fail to change even in the face of inflation or deflation.
D. measured in terms of current-year prices.
Answer: B
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As interest rates fall, the
A) promised payments of bonds fall. B) face values of bonds fall. C) price of bonds rises. D) price of bonds falls.
In the late 1990s, the U.S. federal government had a budget surplus. If there is no Ricardo-Barro effect, these surpluses ________ the supply of loanable funds and ________ the real interest rate
A) increased; lowered B) decreased; lowered C) increased; raised D) decreased; raised E) did not change; did not change
Which of the following terms describes the process in which the exchange rate equalizes the prices of internationally traded goods across countries?
a. purchasing power parity b. exchange c. profiteering d. arbitrage
When a payment is indexed to inflation and the price index understates inflation,
a. the real payment decreases over time b. the real payment increases over time c. the nominal payment decreases over time d. in unemployment rate will increase e. the level of unemployment will increase