Luigi is willing to lend Klaus $5,000 for one year at a nominal rate of interest of 7%. Both Luigi and Klaus expect the rate of inflation to be 2% in the next year. If the actual rate of inflation over the year was 1%, we can say ________.
A. Luigi is better off and Klaus is worse off
B. Luigi is worse off and Klaus is better off
C. Luigi and Klaus are both better off
D. Luigi and Klaus are both worse off
Answer: A
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According to supply-side economics, a(n) ________ in the tax rate tends to increase the labor supply and ________ aggregate output
A) decrease; decrease B) increase; decrease C) increase; increase D) decrease; increase
Refer to Figure 27-1. Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A) A to E. B) C to B. C) B to C. D) B to A. E) A to B.
Which of the following countries averaged GDP growth (after adjusting for inflation) of at least 5% per year both from 1990 to 2000 and from 2000 to 2008, and therefore, can be grouped into the fast-growth category?
a. Cambodia b. Canada c. Japan d. Jamaica
When a price floor is imposed above the equilibrium price of a commodity,
a. quantity demanded will be greater than quantity supplied for the good. b. the quantity demanded by consumers will be greater than at the equilibrium price. c. a shortage of the good will develop. d. a surplus of the good will develop.