Suppose the real interest rate is 4% and the expected inflation rate is 3%. If the money supply increases by 10% and output, the real interest rate, and the expected inflation rate are unchanged, then the price level increases by
A. 7%.
B. 4%.
C. 3%.
D. 10%.
Answer: D
You might also like to view...
The ________ always equals zero
A) sum of capital and financial account plus official settlements account B) sum of current account plus capital and financial account C) sum of current account plus official settlements account D) sum of current account plus capital and financial account plus official settlements account E) official settlements account
Country A has a capital—labor ratio that is initially twice as big as that of country B, but neither is yet in a steady state. Both countries have the same production function, f(k) = 6k1/2
Country A has a 10% saving rate, 10% population growth rate, and 5% depreciation rate, while country B has a 20% saving rate, 10% population growth rate, and 20% depreciation rate. (a) Calculate the steady-state capital—labor ratio for each country. Does the initial capital—labor ratio affect your results? (b) Calculate output per worker and consumption per worker for each country. Which country has the highest output per worker? The highest consumption per worker?
The euro floats against other currencies, but the member nations of the euro have no separate national money. For this reason, Spain, that uses the euro as its currency is listed under the managed float arrangement
a. True b. False Indicate whether the statement is true or false
Which of the following about minimum wage is true?
a. Most minimum wage workers are employed more than 40 hours per week. b. Economic analysis indicates an increase in the minimum wage would increase the training opportunities available to inexperienced workers. c. Most minimum wage workers are heads of families with incomes below the poverty level. d. Most minimum wage workers are employed part-time, and they are often members of a household with an income well above the poverty level.