Real interest rates are
A) procyclical, just like nominal interest rates.
B) acyclical, while nominal interest rates are procyclical.
C) acyclical, just like nominal interest rates.
D) countercyclical, while nominal interest rates are procyclical.
B
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Suppose that the price of wheat is above its equilibrium price. You would expect to see
A) a shortage on the market that causes prices to increase further. B) an increase in quantity demanded because of the high price. C) a leftward shift of the demand curve because of the high price. D) sellers begin to lower their prices because of the surplus of wheat.
A bank might make mortgages to people in different regions of the country. By doing so
a. the bank reduces the risk it faces from falling house prices in its region and falling prices in all regions. b. the bank reduces the risk it faces of falling house prices in its region but not from falling prices in all regions. c. the bank reduces the risk it faces of falling house prices in all regions, but not the risk it faces from falling house prices in its regions. d. the bank reduces neither the risk it faces from falling house prices in its region nor falling prices in all regions.
Which of the following statements is true?
A. If the government's goal is to induce early production, even when the new firms are not cost-competitive by world standards, a barrier to the import of the product produced by these firms would be an ideal policy. B. If young firms are struggling to retain their trained workers, then government should offer a subsidy to offset the costs of training workers. C. If the domestic firms do not supply anything at the world price, the government should lower the barriers to importing the product to spur domestic production. D. If new firms are struggling to obtain funds from underdeveloped financial markets, the most efficient policy solution would be to offer a production subsidy to these firms.
Suppose Congress increased spending by $100 billion and raised taxes by $100 billion to keep the budget balanced. What will happen to real equilibrium GDP?
A) Real equilibrium GDP will fall. B) Real equilibrium GDP will rise. C) There will be no change in real equilibrium GDP. D) Real equilibrium GDP will initially rise, but then fall below its previous equilibrium value.