Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e). Assume M = 4000, P = 2.0, ?e = .03, and Y = 5000. The real interest rate that clears the asset market is
A) 3%.
B) 6%.
C) 11%.
D) 14%.
C
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The net effect of savings of the asset substitution, induced retirement, and bequest effects combined is that people save ________they would have without Social Security.
A. slightly less than B. the same as C. more than
New classical economists like Robert Lucas argue that the Great Depression was primarily caused by
a. lots of mistaken expectations about the future. b. significant falls in investment. c. significant falls in the money supply. d. significant increases in taxes. e. all of the above.
One of the advantages that corporations have as a business organization is that corporate profits are only taxed once.
Answer the following statement true (T) or false (F)
How does the principal-agent problem increase the possibility of moral hazard?
What will be an ideal response?