Monetary policy has no effect on the equilibrium interest rate if
A) the inflation rate is zero.
B) the economy is in the liquidity trap.
C) velocity is constant.
D) the economy is at full employment.
B
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If a stock is expected to pay a dividend of $40 for the current year, what is the approximate present value of this stock, given at discount rate of 5% and a dividend growth rate of 3%?
What will be an ideal response?
According to rational expectations theory: a. a large reduction in unemployment can be achieved with a relatively small increase in inflation
b. people are not easily fooled by changes in government fiscal policy. c. inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time. d. the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate.
The downward-sloping supply curve and the upward-sloping demand curve intersects to yield the equilibrium nominal interest rate
Indicate whether the statement is true or false
The aggregate demand is described graphically as a. sloping downward. b. a vertical line
c. a horizontal line. d. sloping upward.