Suppose the nominal interest rate is 5% and the rate of inflation is 5%. The real interest rate is therefore
A) 0%.
B) 1%.
C) 5%.
D) 6%.
A
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Of all the constant elasticity of substitution social welfare function, only the one with elasticity of infinity will always choose the efficient outcome from a second-best consumption possibility frontier.
Answer the following statement true (T) or false (F)
An exchange rate is
a. the rate at which goods are traded between countries b. the rate of the net difference between exports and imports c. the denomination of currency used to purchase imports d. the price of one currency in terms of another e. the price at which one good trades for another
Briefly explain the command-and-control approach in dealing with an externality such as pollution. Give an example of the U.S. government using the command-and-control approach to deal with the pollution problem
What will be an ideal response?
In the long run, the Federal Reserve can control which of the following?
A) the unemployment rate B) the growth rate of real GDP in the economy C) the inflation rate D) the natural rate of unemployment