(Consider This) The story about economist Irving Fisher's conversation with his masseuse illustrates that:
A. other things equal, interest rates are higher on smaller loans than on larger loans.
B. interest is a payment required for someone to give up the present use of their money.
C. other things equal, longer-term loans have lower interest rates than shorter-term loans.
D. real interest rates differ from nominal interest rates.
Answer: B
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Suppose that the capital stock initially is 1000, the depreciation rate is 0.08, and investment is 220. This makes the net growth of the capital stock
A) 300. B) 237.6. C) 202.4. D) 140.
On the Solow Diagram, an increase in population growth is shown by ________
A) an upward shift of the depreciation plus capital dilution line B) an upward shift of the investment function C) an upward shift of the per-worker production function D) a downward shift of the investment function
The Phillips curve shows
A) a positive relationship in the long run between the rate of inflation and the rate of unemployment. B) a negative relationship between the inflation rate and the unemployment rate, at least in the short run. C) a positive relationship between contractionary monetary policy and higher price levels. D) a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed.
Deflation is a:
A. sustained fall in the aggregate price level. B. sustained increase in the aggregate price level. C. steady, unchanging aggregate price level. D. steady fall in the exchange rate.