Because banks make loans based on expectations concerning future economic activity, they
a. tend to make more loans during recessions and fewer loans during periods of prosperity, which helps the economy
b. tend to make more loans during periods of prosperity and fewer loans during recessions, which doesn't help the economy
c. make the same level of loans whether there is prosperity or recession but the profit they earn, which is based on the interest rate, varies
d. expand the money supply faster in recessions than during periods of prosperity
e. keep more excess reserves during periods of prosperity than during recessions
B
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If changes in inflation are higher than expected
A) the short-run Phillips curve will be negatively sloped. B) the short-run Phillips curve will be vertical. C) the short-run Phillips curve will be positively sloped, but not vertical. D) the long-run Phillips curve will be negatively sloped.
A corporation issues a three year bond with a coupon of $50 and a face value of $1000. Immediately after being issued, market interest rates decline to 4%. What is the price of the bond? Report your answer to the nearest dollar
What will be an ideal response?
Which of the following is an exogenous variable in the model of a small open economy, but an endogenous variable in the model of a large open economy?
A) B) C C) Y D) NX E) G
A relative price is:
A. a measure of overall prices at a particular point in time. B. the percentage change in a price index such as the CPI. C. the rate of inflation. D. the price of a specific good in comparison to the prices of other goods and services.