Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:
A. Both lenders and borrowers benefit
B. Both lenders and borrowers are hurt
C. Borrowers are hurt, but lenders benefit
D. Lenders are hurt, but borrowers benefit
D. Lenders are hurt, but borrowers benefit
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According to rational expectations theory,
a. there is absolutely nothing government can do, even in the short run, to reduce the economy's unemployment rate. b. the government can use fiscal policy such as increased government spending or lower tax rates to reduce unemployment. c. a modern extension of Keynesian economics exists. d. discretionary fiscal policy is essential for prolonged growth. e. market participants can be fooled in the long run by monetary and fiscal policy rules.
When foreign countries buy wheat grown in the United States, they are generating a
A. Demand for U.S. dollars and a supply of a foreign currency. B. Demand for U.S. dollars and a demand for a foreign currency. C. Supply of U.S. dollars and a supply of a foreign currency. D. Supply of U.S. dollars and a demand for a foreign currency.
The fear of unwanted price wars may explain why many firms are reluctant to:
A. reduce wages when a decline in aggregate demand occurs. B. reduce prices when a decline in aggregate demand occurs. C. expand production capacity when an increase in aggregate demand occurs. D. provide wage increases when labor productivity rises.
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000 while a market researcher receives $20,000. The marginal contribution of engineers and market researchers are:
Based on the above information, if the manager has an annual budget of $140,000 and currently is hiring two engineers and three market researchers, then
A. he is making the correct decision because the last market researcher hired was more productive than the last engineer hired. B. the last dollar spent on an engineer yielded more new products than the last dollar spent on a market researcher. C. he is making the correct decision because engineers make more than market researchers. D. the last dollar spent on a market researcher yielded more new products than the last dollar spent on an engineer.