The reason that the expected inflation rate matters in determining the impact on borrowers or lenders is that
A. higher interest rates mean higher payments.
B. interest rates depend on actual inflation, rather than expected inflation.
C. lower interest rates mean lower payments.
D. interest rates depend on expected inflation, rather than actual inflation.
Answer: D
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According to real business cycle theory, the primary causes of business cycles are
A) shocks to aggregate demand. B) monetary factors. C) technology shocks. D) waves of self-fulfilling optimism and pessimism.
An increase in the price level means that
A) long-run aggregate supply has increased. B) monetary policy has been contractionary. C) the value of the dollar has increased. D) the purchasing power of money has fallen.
Major firms charged with predatory pricing defend by saying that their prices are low because of superior efficiency
a. True b. False Indicate whether the statement is true or false
A characteristic of a market economy is:
a. central economic planning by the government b. use of traditional farming methods c. consumer goods often not available d. little government interference in the economy