If the price of gasoline has increased from $2 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 450, then you know that the inflation adjusted price of gasoline has
A. decreased.
B. remained constant.
C. increased.
Answer: C
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Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?
A) They must increase by $5. B) They can decrease by $5. C) They must increase by $2.50. D) They must increase, but the amount of the increase depends on income.
Which of the following may not characterize an oligopoly?
A. No market power. B. A few firms. C. Substantial control over price. D. High barriers to entry.
When the Federal Reserve calls in a discount loan from a bank, the monetary base ________ and reserves ________
A) remains unchanged; decrease B) remains unchanged; increase C) decreases; decrease D) decreases; remains unchanged
When interest rates in the bond market rise,
A) adverse selection problems increase. B) adverse selection problems are mitigated. C) moral hazard problems increase. D) moral hazard problems are mitigated.