An increase in financial innovations such as increased network of ATM machines and the widespread acceptance of debit cards
A) will shift the demand for money to the right.
B) will shift the demand for money to the left.
C) increases the quantity of money people want to hold at each interest rate.
D) decreases the quantity of money people want to hold at each interest rate.
Ans: B) will shift the demand for money to the left.
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In the mid 1980s, the massive current account deficits were related to massive U.S. government budget deficits
Indicate whether the statement is true or false
GDP differs from GNP because
A) GDP = GNP - net factor payments from abroad. B) GNP = GDP - net factor payments from abroad. C) GDP = GNP - capital consumption allowances. D) GNP = GDP - capital consumption allowances.
Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e2 and a reservation wage of $1,500 so that her compensation package is W = 1,500 + 0.2 Q, where the CEO sets the incentive at 0.2 and Q = 200 e. Here effort is known only by the employee. There is a random shock to output each period whose mean is zero. (a) What is the optimal effort for Mary Sue Nelson? (b) On average, what total wage or salary will she earn each month? (c) On average, what is the output of sales contracts that she makes? (d) On average, what kind of profit will the CEO earn off of Nelson's work?
What will be an ideal response?
You borrow $10,000 from a bank for one year at a nominal interest rate of 5%. If inflation over the year is 2%, what is the real interest rate you are paying?
A) 2% B) 2.5% C) 3% D) 5%