An increase in the expected rate of inflation will:
A. lower the demand for real balances because the real interest rate will rise.
B. lower demand for real balances because the nominal interest rate will rise.
C. increase the demand for real balances because the real interest rate will fall.
D. increase the demand for real balances because the nominal interest rate will rise.
Ans: B. lower demand for real balances because the nominal interest rate will rise.
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In banking-oriented systems, handling of the manager-stockholder conflict in large firms is through
A) rating agencies. B) the potential for takeovers. C) management ownership of the firm. D) bank ownership of the firm.
In the classical model, the supply-determined nature of output is illustrated by a(n)
a. horizontal aggregate supply curve. b. vertical aggregate supply curve. c. upward sloping aggregate supply curve. d. downward sloping aggregate supply curve.
An open economy with a government sector is in equilibrium and imports are equal to exports. This means that:
(a) Investment plus taxation is equal to savings plus government spending; (b) Investment plus government spending is equal to savings plus taxation; (c) Investment plus government spending is greater than savings plus taxation; (d) Investment plus taxation is less than savings plus government spending.
Which of the following equations is always correct in an open economy?
a. NX = Y - C - G - I b. NX = S - I c. NX = NCO d. All of the above are correct.