At the beginning of the year, Becky's wealth was $30,000. During the year, she earned $50,000 of income, paid $6,000 in taxes and consumed $43,000 of goods and services. What is Becky's wealth at the end of the year?
What will be an ideal response?
Becky's wealth is $31,000, the sum of her initial wealth ($30,000 ) plus her new saving of $1,000.
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Refer to Scenario 25-2. As a result of Kristy's deposit, Bank A's reserves immediately increase by
A) $2,000. B) $8,000. C) $10,000. D) $50,000.
"No country is abundant in everything." Discuss
What will be an ideal response?
Which of the following most accurately describes the "Fisher effect?"
a. Interest rates increase after inflation and decrease after deflation, but with a long lag. b. Interest rates are independent of inflation and deflation. c. Interest rates increase after inflation, but are not affected by deflation. d. Increasing interest rates precede inflation and decreasing interest rates precede deflation.