By Marks buys a one-year German government bond (called a bund) for $400. He receives principal and interest totaling $436 one year later. During the year the CPI rose from 150 to 162. The nominal interest rate on the bond was ________, and the real interest rate was ________.
A. 9%; 1%
B. 36%; 24%
C. 9%; -1%
D. 36%; 12%
Answer: A
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If buyers of a monopolistically competitive product feel the products of different sellers are strongly differentiated, then the demand for each seller's product is
A) relatively elastic. B) relatively inelastic. C) perfectly inelastic. D) perfectly elastic.
The Federal Open Market Committee directive is a
A) general statement of Federal Reserve policy goals. B) detailed description of government security purchases to be carried out by the New York Federal Reserve bank. C) statement specifying the maximum level of inflation the Federal Reserve will accept. D) statement specifying the maximum level of unemployment the Federal Reserve will accept.
Price controls may be thought of as
A) a restraint on the rationing function of prices. B) useful tools that promote production. C) necessary in market economies. D) the freeing-up of free market forces.
Using a big-push strategy for LDC economic development, the private sector
a. does not participate at any stage b. participates actively only at the beginning c. contributes matching funds to all government-financed projects d. participates after the government push creates the multiplicity of markets e. hurts the process by charging high prices for goods produced since it typically has monopoly power