If a 10-year Treasury bond pays 1.5% and a 10-year corporate bond pays 6.0%, what is the interest rate spread on this particular corporate bond?
a. 4.0%
b. 4.5%
c. 7.5%
d. 9.0%
b
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In New Keynesian analysis, firms are assumed to be
A) interested solely in maximizing their profit. B) interested in both their profit and the avoidance of business cycles. C) interested solely in avoiding business cycles. D) interested solely in maximizing production.
In the game in Scenario 13.14, each firm has a strategy that would not be chosen under any circumstances. This strategy is
A) Q = 50. B) Q = 100. C) Q = 150. D) "choose the same Q as the other player." E) "choose a Q different from the other player's."
When people expect higher inflation, usually nominal interest rates will:
A. rise. B. fall. C. remain unchanged. D. move erratically.
Monetarists believe that an increase in the money supply shifts the aggregate
A. Supply curve to the right. B. Supply curve to the left. C. Demand curve to the right. D. Demand curve to the left.