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.
a. Interest rates increase after inflation and decrease after deflation, but with a long lag.
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Charging different prices for similar products that have different marginal costs is called
A. predatory pricing. B. price dumping. C. price discrimination. D. price differentiation.
A market equilibrium might not maximize total economic surplus because:
A. in a market equilibrium individuals do not exploit all opportunities for individual gain. B. sometimes goods entail costs and benefits that do not fall on buyers and sellers. C. in a market equilibrium individuals do not act rationally. D. efficiency is not an important social goal.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government sponsored enterprises, Fannie Mae and Freddie Mac, to stand between investors and banks that grant mortgages
Fannie Mae and Freddie Mac A) sell bonds to investors and use the funds to purchase mortgages from banks. B) sell bonds to banks and use the funds to purchase mortgages from investors. C) sell mortgages to banks and use the funds to purchase bonds from investors. D) sell mortgages to investors and use the funds to purchase bonds from banks.