An analysis of countries experiencing rapid inflation indicates that inflation is generally
a. caused by strong labor unions.
b. the result of restrictive macroeconomic policy, which pushes up interest rates.
c. caused by the impulse buying of consumers, who continue to buy the same goods even when prices rise.
d. the result of rapid growth in the money supply.
D
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The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is
A) 2%. B) 6%. C) 8%. D) 10%.
Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same. c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same. d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
If markets are perfectly competitive and production of a good results in water pollution, the imposition of a tax on the good will:
A. reduce the number of firms producing that good in the long run. B. reduce the number of firms producing that good in the short run. C. increase the number of firms producing that good in the long run. D. increase the number of firms producing that good in the short run.
___________ said that a person pursuing his own interest, "frequently promotes that of society more effectively than when he really intends to promote it."
Fill in the blank(s) with the appropriate word(s).