In the period of U.S. economic history known as the Great Depression, the rate of inflation was generally
a. trending upward.
b. positive.
c. uncertain.
d. negative.
d
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Most Americans
A. have accurate perceptions of the level of corporate profits. B. underestimate corporate profits. C. overestimate corporate profits. D. believe that corporations earn zero profit.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Suppose a bank in Germany borrows $2 million U.S at an interest rate of 5%. The bank then converts the amount into euros, the local currency, at a rate of 2 euros per dollar. It lends the €4 million at an interest rate of 15% to other firms. After one year, the loan is repaid with interest, and the bank receives €4.6 million. The bank now wants to pay back the debt. If the current exchange
rate is 3 euros per dollar, the bank will: a. face a loss of $570,000 approximately. b. face a loss of $470,000 approximately. c. make a profit of $500,000 approximately. d. make a profit of $320,000 approximately.
If the government wants to increase economic efficiency, it should:
A. never subsidize goods. B. subsidize goods that entail positive externalities. C. tax goods that entail positive externalities. D. never tax goods.