Why did some of the formerly Communist countries of Eastern Europe have inflation rates over 100%, while others didn't? Which factor was more important in explaining the differing inflation rates, real money demand or nominal money supply? Why did
the countries with high inflation rates allow inflation to get so high?
Some countries had high inflation while others didn't because of differences in rates of money growth. Real money demand didn't vary enough to explain the differences in inflation rates; instead, nominal money supply growth was strongly correlated with inflation. The countries allowed inflation to get so high because they were trying to finance government expenditures by printing money.
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If a person earns an 8 percent nominal rate of interest on his savings account in a year when inflation is 9 percent, the person's real rate of interest is
a. -1 percent. b. 1 percent. c. 8 percent. d. 9 percent.
Which of the following could be responsible for the depreciation of a country's currency?
A. The country expands its tourist industry. B. The country experiences a sudden drop in the rate of inflation while other nations do not. C. Speculators anticipate economic growth in that nation. D. The country defaults on bonds held by foreigners.
Which school is the most opposed to government countercyclical intervention?
A. The Keynesians B. The monetarists C. The supply-siders D. The new classical economists
The supply of workers in a particular occupation could be relatively large if:
A. training costs are low. B. job features are undesirable. C. there are few people with the required skills. D. there are artificial barriers to enter that profession.