People can reduce the inflation tax by
a. reducing savings.
b. increasing deductions on their income tax.
c. reducing cash holdings.
d. None of the above is correct.
c
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The government can help solve the information asymmetry problem by:
A. providing the missing information to the less-informed party. B. requiring the more informed party to reveal the missing information. C. finding ways to make the same amount of information known to both parties. D. All of these statements are true.
If the CPI rose from 200 in 1992 to 260 in 1996, by what percentage did prices increase?
What will be an ideal response?
To calculate GDP once national income has been computed, we must
A. add depreciation and indirect business taxes and transfer payments and subtract other business income adjustments and net U.S. income earned abroad. B. add indirect business taxes and transfers and subtract depreciation, other business income adjustments, and net U.S. income earned abroad. C. add indirect business taxes and transfers and subtract profits. D. add depreciation and subtract indirect business taxes.
You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 4%. You should charge a nominal interest rate of
A. -6%. B. 6%. C. 10%. D. 14%.