Bondholders are not indifferent when a company sells more bonds
Indicate whether the statement is true or false
True
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Refer to Figure 15-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely
A) decrease the inflation rate. B) decrease interest rates. C) not change interest rates. D) increase interest rates.
Under the monetary approach to exchange rate theory, money supply growth at a constant rate
A) eventually results in ongoing price level deflation at the same rate, but changes in this long-run deflation rate do not affect the full-employment output level or the long-run relative prices of goods and services. B) eventually results in ongoing price level inflation at the same rate, but changes in this long-run inflation rate do affect the full-employment output level and the long-run relative prices of goods and services. C) eventually results in ongoing price level inflation at the same rate, but changes in this long-run inflation rate do not affect the full-employment output level or the long-run relative prices of goods and services. D) eventually results in ongoing price level inflation at the same rate, but changes in this long-run inflation rate do not affect the full-employment output level, only the long-run relative prices of goods and services. E) eventually results in ongoing price level deflation at the same rate, but changes in this long-run deflation rate do not affect the full-employment output level, only the long-run relative prices of goods and services.
Free ridership is associated with market failure, resulting in lower than efficient prices and higher than efficient quantities
Indicate whether the statement is true or false
Equality refers to how the pie is divided, and efficiency refers to the size of the economic pie
a. True b. False Indicate whether the statement is true or false