A currency system in which exchange rates are determined in free markets is called a
A) gold standard. B) flexible exchange rate system.
C) fixed exchange rate system. D) all of the above
B
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
If both matches and automobile prices increase by 10 percent, consumers will likely buy
A. fewer matches and approximately the same quantity of automobiles. B. approximately the same quantity of matches and fewer automobiles. C. fewer matches and fewer automobiles. D. approximately the same quantity of both matches and automobiles.
Expansionary monetary policy is likely to lead to a depreciation of the nation's currency
Indicate whether the statement is true or false
Suppose you borrow $5,000 at an interest rate of 8%. If the expected real interest rate is 3%, then the rate of inflation over the upcoming year that would be most beneficial to you would be
A) 0%. B) greater than 0% but less than 5%. C) equal to 5%. D) greater than 5%.