ECO2013 MACRO

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the

marginal benefit of more insurance coverage is greater than the marginal cost.

The GDP gap measures the amount by which

potential GDP exceeds actual GDP.

In calculating the unemployment rate, part-time workers are

counted as employed because they are receiving payment for work.

In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?

expansion

In recent years, the United States has

exported more services abroad than it has imported.

Which of the following is another way of saying "marginal benefits of an action"?

extra benefits resulting from the action

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs. If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

produce more TVs and fewer hamburgers.

The opportunity cost to a consumer who smokes cigarettes consists of the

products that the consumer could have bought instead of cigarettes.

The concept of opportunity cost

suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.

If the economy has a cyclically adjusted budget surplus, this means that

tax revenues would exceed government expenditures if full employment were achieved.

What is a major opportunity cost of going to college on a full-time basis?

the forgone income that would have been earned working in a full-time job

Automatic stabilizers smooth fluctuations in the economy because they produce changes in the government's budget that

help offset changes in GDP.

The optimal allocation of resources is found

where MB = MC.

Which one of the following expressions best states the idea of opportunity cost?

"There is no such thing as a free lunch."

If actual reserves in the banking system are $8,000, checkable deposits are $70,000, and the legal reserve ratio is 10 percent, then excess reserves are

$1,000.

Item Billions of Dollars Checkable Deposits $597 Small TIme Deposits 818 Currency 639 Money-Market Mutual Funds Held By Businesses 1,045 Savings Deposits, Including Money-Market Deposit Accounts 2,866 Money-Market Mutual Funds Held By Individuals 979 Refer to the accompanying table. The size of the M1 money supply is

$1,236 billion.

A single commercial bank must meet a 25 percent reserve requirement. If it initially has no excess reserves and then $2,000 in cash is deposited in the bank, it can increase its loans by a maximum of

$1,500.

A commercial bank has checkable-deposit liabilities of $50,000 and a required reserve ratio of 20 percent. What is the amount of required reserves?

$10,000

Money Market Mutual Fund Balances Held By Businesses $100 Money Market Mutual Fund Balances Held By Individuals 220 Currency In Banks 10 Currency In Circulation 60 Savings Deposits, Including Money Market Deposit Accounts 50 Large-denominated ($100,000 or more) Time Deposits 180 Small-denominated ($100,000 or less) Time Deposits 80 Checkable Deposits 70 Refer to the table. Money supply M1 for this economy is

$130.

Consider the following information about a banking system: new currency deposited in the system = $40 billion, legal reserve ratio = 0.20, excess reserves prior to the currency deposit = $0. With the $40 billion deposit, the banking system will be able to expand the money supply through loans by

$160 billion.

Assume that the required reserve ratio is 5 percent. If a commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the Fed, and $60 million in checkable deposits, then its excess reserves equal

$2 million.

A bank has excess reserves of $5,000 and demand deposits of $50,000; the required reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, then this bank can lend a maximum of

$2,500.

Refer to the graph. If the economy was initially in equilibrium at point 3 and a government deficit makes interest rates increase by 4 percentage points, then the crowding-out effect would be a reduction of

$20 billion in investment.

(1) (2) (3) Legal Reserve Ratio (%) Checkable Deposits Actual Reserves 10 $40,000 $10,000 20 40,000 10,000 25 40,000 10,000 30 40,000 10,000 The accompanying table gives data for a commercial bank or thrift. When the legal reserve ratio is 10 percent, the money-creating potential of this single bank is

$30,000

Consider the following information about a banking system: new currency deposited in the system = $40 billion, legal reserve ratio = 0.20, excess reserves prior to the currency deposit = $0. The $40 billion deposit of currency into checking accounts will create excess reserves of

$32 billion.

Assets Liabilities and Net Worth Stock Shares $400 Reserves 40 Property 300 Securities 160 Loans 80 Demand Deposits 180 The figures in the table are for a single commercial bank. All figures are in thousands of dollars. This bank has liabilities and net worth totaling

$580 million.

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. The total amount of revenue collected from a $1-per-unit tariff on this product will be

$7.

Assets Liabilities and Net Worth Reserves $30 Checkable Deposits $300 Loans 130 Stock Shares 130 Securities 70 Property 200 Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 10 percent. All figures are in billions. After the deposit of $10 billion of new currency, the maximum amount by which this commercial banking system can expand the supply of money by lending is

$90 billion.

A single commercial bank must meet a 25 percent reserve requirement. If the bank has no excess reserves initially and $5,000 of cash is deposited in the bank, it can increase its loans by a maximum of

3,750

If the reserve ratio is 100 percent, the value of the monetary multiplier is

1

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. What are the limits of the terms of trade between Gamma and Sigma?

1 tea = 1 pot to 1 tea = 3 pots

Reserves $100 Checkable Deposits 1,000 Loans (to customers) 300 Property 400 Securities (owned) 300 Stock Shares 100 Refer to the accompanying table of information for the Moolah Bank. If Moolah Bank is legally "loaned up," the reserve requirement must be

10 percent

U.S. exports of goods and services (on a national income account basis) are about

13 percent of U.S. GDP.

The number of countries belonging to the World Trade Organization (WTO), as of 2015, is about

161

The economy has an annual inflation rate of 3.5 percent. It will take approximately how many years for the price level to double?

20 years

In the depth of the Great Depression, the unemployment rate in the United States was about

25 percent

During the Great Depression of the 1930s, U.S. real GDP fell by about ____ percent, in comparison to the ______ percent decline during the Great Recession of 2007-09.

27; 4.3

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is

3 percent.

If the natural rate of unemployment is 4.5 percent and the actual unemployment rate is 6.5 percent, then Okun's law indicates that the GDP gap is

4 percent

Government Spending Tax Revenues GDP Year 1 $450 $425 $2,000 Year 2 500 450 3,000 Year 3 600 500 4,000 Year 4 640 620 5,000 Year 5 680 580 4,800 Year 6 600 620 5,000 The accompanying table gives budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. The public debt declined in year

6

If the inflation premium is 3 percent and the real interest on a loan is 4 percent, then the nominal interest rate is

7 percent.

Suppose that lenders want to receive a real rate of interest of 5 percent and that they expect inflation to remain steady at 2 percent in the coming years. Based on this, lenders should charge a nominal interest rate of

7 percent.

Which of the following illustrates a macroeconomic question?

Are increasing wage demands by workers contributing to price inflation?

Refer to the diagram. Technological advance that is useful in producing consumer goods but not in producing capital goods is shown by the shift of the production possibilities curve from AB to

AF

Economists

are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes.

Economic theories

are useless because they are not based on laboratory experimentation.

Money is not considered to be an economic resource because

as such it is not productive.

Which nation had the largest share of world exports in 2014?

CHINA

Which country has the largest share of total world exports?

China

Discretionary fiscal policy is often initiated on the advice of the

Council of Economic Advisers.

If government increases the size of its cyclically adjusted surplus, we can

assume that government is having a contractionary effect on the economy.

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. On the basis of this information

Gamma should export tea to Sigma, and Sigma should export pots to Gamma.

reduce taxes and increase government spending to shift the aggregate demand curve from AD1 to AD2.

contractionary and worsen the effects of the recession.

In the expansion phase of the business cycle

Employment and output increase

The World Trade Organization was established as a successor to

GATT.

Refer to the graph. A budget surplus would be associated with GDP level

L.

Which of the following statements pertains to macroeconomics?

National income grew by 2.7 percent last year.

"NAFTA" stands for

North American Free Trade Agreement.

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of

Okun's law.

Refer to the graph. Assume that the economy is in a recession with a price level of P1 and output level Q1. The government then adopts an appropriate discretionary fiscal policy. What will be the most likely new equilibrium price level and output?

P2 and Q2

Purposeful behavior suggests that

Purposeful behavior suggests that

(Last Word) Which of the following statements best represents economists' predictions about recovery from the Great Recession?

Recovery would take longer than usual because the recession was preceded by a credit bubble.

What is the best economic explanation for why a person would drop out of college in order to start a business?

The expected future benefits from starting a business now are greater than the costs.

Which of the following is a microeconomic statement?

The price of smartphones declined 2.8 percent last year.

Which of the following countries had the smallest share of exports as a percentage of GDP in 2014?

United States

On the basis of the information, and assuming trade occurs between the three states, we can expect

Washington to exchange apples with Texas and receive money in return.

Which question is an example of a macroeconomic question?

What policies would be recommended for stimulating national economic growth?

A high tariff on imported good X might reduce domestic employment in industry Y if

X is an input used domestically in producing Y.

The economic principle that the "unemployment rate will tend to increase as the economy moves into a recession" is an example of

a generalization.

Economists would classify all of the following as "land," except

a hydroelectric dam.

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

a law requiring mandatory retirement from the labor force at age 55

Cost-push inflation may be caused by

a negative supply shock.

The term "other things equal" means that

a number of relevant variables are assumed to be constant.

Refer to the diagram, in which Qf is the full-employment output. If the economy's current aggregate demand curve is AD3, it is experiencing

a positive GDP gap.

A well-tested economic theory is often called

a principle.

(Advanced analysis) Refer to the diagram, in which C1 is the before-tax consumption schedule. The consumption schedule represented by C4 reflects

a progressive tax system.

Rising per-unit production costs are most directly associated with

cost-push inflation.

Refer to the diagram, in which Qf is the full-employment output. The shift in the aggregate demand curve from AD3 to AD2 could result from which of the following fiscal policy actions?

a tax reduction accompanied by an even larger reduction in government spending

If the GDP gap is positive, then

actual GDP is greater than potential GDP.

If the unemployment rate for the U.S. economy rises from 7 to 11 percent during a year, we can conclude that

actual GDP is less than potential GDP.

Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP is $400 billion, while the actual GDP is $200 billion, the

actual budget deficit exceeds the cyclically adjusted budget deficit.

Which of the following is the best synonym for "marginal" in economics?

additional

Refer to the diagram, in which Qf is the full-employment output. The shift of the aggregate demand curve from AD1 to AD2 is consistent with

an expansionary fiscal policy.

The increased-domestic-employment argument for tariff protection holds that

an increase in tariffs will increase net exports and stimulate domestic employment.

Refer to the accompanying graph. What combination would most likely cause a shift from AD1 to AD3?

an increase in taxes and a decrease in government spending

Most economists agree that the immediate cause of most business cycle variation is

an unexpected change in the level of total spending.

An economic model is a purposeful simplification of reality, whose function includes

analyzing the behavior of a typical or average consumer or firm.

Inflation is undesirable because it

arbitrarily redistributes real income and wealth.

In the diagram, it is assumed that investment, net exports, and government purchases

are independent of the level of GDP.

Economics is a social science that studies how individuals, institutions, and society may

best use resources to maximize satisfaction of economic wants.

Inflation affects

both the level and the distribution of income.

The law of increasing opportunity costs is reflected in a production possibilities curve that is

bowed out from the origin.

According to Congressional Budget Office (CBO) projections,

budget deficits are expected to remain large for the next several years.

Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy

can improve its allocation by producing more of one good and less of the other.

Given the annual rate of inflation, the "rule of 70" allows one to

calculate the number of years required for the price level to double.

Full-Time Employed = 80 Part-Time Employed = 25 Unemployed = 15 Discouraged Workers = 5 Members of Underground Economy = 6 Consumer Price Index = 110 Refer to the given information about a hypothetical economy. The rate of inflation

cannot be determined from the data.

Refer to the diagram. The degree of built-in stability in the economy could be increased by

changing the tax system so that the tax line has a greater slope.

Refer to the graph. Automatic stability in this economy could be enhanced by

changing the tax system so that the tax line has a steeper slope.

Which of the following is an example of a capital-intensive commodity?

chemicals

The study of economics is primarily concerned with

choices that are made in seeking the best use of resources.

Holding the money deposits of businesses and households and making loans to the public are the basic functions of

commercial banks and thrift institutions.

Countries engaged in international trade specialize in production based on

comparative advantage.

The point on the production possibilities curve that is most desirable can be found by

comparing marginal benefits and marginal costs.

Increased government spending for investments such as highways or harbors financed by increasing the public debt would most likely

complement private investment.

Unemployed 7 Total Population 145 Employed 95 Discouraged Workers 3 The table contains information about the hypothetical economy of Scoob. All figures are in millions. If the natural rate of unemployment in Scoob is 5 percent, then

cyclical unemployment is about 2 percent.

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the

cyclical unemployment rate is 4 percent.

Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, all else equal, the official unemployment rate would

decline

From 2010 to 2015, the actual as well as the cyclically adjusted federal budget deficits as percentages of GDP in the U.S. have

decreased

A commercial bank sells a $10,000 government bond to a securities dealer. The dealer pays for the bond in cash, which the bank adds to its vault cash. The money supply has

decreased by $10,000.

Fiscal policy refers to the

deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.

The phrase "too much money chasing too few goods" best describes

demand-pull inflation.

Excess reserves refer to the

difference between actual reserves and required reserves.

Which of the following is an example of a labor-intensive commodity?

digital cameras

The marginal benefit curve is

downsloping because successive units of a specific product yield less and less extra benefit.

The optimal point on a production possibilities curve is achieved where

each good is produced at a level where marginal benefits equal marginal costs.

In order for mutually beneficial trade to occur between two otherwise isolated nations,

each nation must be able to produce at least one good relatively cheaper than the other.

Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in Alaska. That year, Professor Simpson would be officially counted as

employed

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

entrepreneur.

The purpose of the ceteris paribus assumption used in economic analysis is to

focus on the effect of a single factor on a certain variable

Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job in two weeks with company B. Kyle will be considered as

frictionally unemployed.

During the Financial Crisis of 2007-2008, Goldman Sachs, Morgan Stanley, and other financial firms with heavy exposure to the mortgage-related problems rushed to become bank holding companies in order to

get massive loans from the Fed.

A Federal budget deficit is financed by the

government issuance or sale of Treasury securities.

The production possibilities curve illustrates the basic principle that

if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

The law of increasing opportunity costs states that

if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so.

In 2015, the United States

imported more goods than it exported.

Assume that the required reserve ratio is 20 percent. A business deposits a $50,000 check at Bank A; the check is drawn against Bank B. What happens to the excess reserves at Bank A and Bank B?

increase by $10,000 at Bank A, and decrease by $10,000 at Bank B

Refer to the diagram. If the full-employment GDP is Y3, government should

increase taxes and reduce government spending.

Security Amount (in Billions) Treasury Bills $220 Corporate Bonds 140 Treasury Notes 80 Corporate Stock 200 US Savings Bonds 60 Treasury Bonds 100 Other things equal, an increase of Treasury bonds from $100 billion to $120 billion in the economy would

increase the public debt from $460 billion to $480 billion.

A commercial bank has no excess reserves until a depositor places $2,000 in cash in the bank. The reserve ratio is 10 percent. The bank then lends $1,500 to a borrower. As a consequence of these transactions, the bank's excess reserves are

increased by $300.

If a person's nominal income increases by 5 percent while the price level increases by 2 percent, then that person's real income

increases by 3 percent.

A person's real income will increase by 3 percent if her nominal income

increases by 5 percent while the price index rises by 2 percent.

If two variables are inversely related, then as the value of one variable

increases, the value of the other decreases.

If the MPS in an economy is 0.1, government could shift the aggregate demand curve rightward by $40 billion by

increasing government spending by $4 billion.

Collateralized default swaps

insured holders of loan-backed securities in case the underlying loans were not repaid.

The process of producing and accumulating capital goods is called

investment

Discretionary fiscal policy is so named because it

involves specific changes in T and G undertaken expressly for stabilization at the option of Congress.

An economic hypothesis

is a possible explanation of cause and effect.

Contractionary fiscal policy is so named because it

is aimed at reducing aggregate demand and thus achieving price stability.

The natural rate of unemployment

is equal to the total of frictional and structural unemployment.

As it relates to international trade, dumping

is the practice of selling goods in a foreign market at less than cost.

The "eurozone"

is the subset of the EU that uses a common currency.

Economists who criticize trade adjustment assistance argue that

it only benefits a small fraction of all unemployed workers.

One basic difference between "labor" and "entrepreneur" is that

labor is hired by a firm, whereas the entrepreneur owns the firm.

A contractionary fiscal policy is shown as a

leftward shift in the economy's aggregate demand curve.

A lender need not be penalized by inflation if the

lender correctly anticipates inflation and increases the nominal interest rate accordingly.

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then

lenders are hurt, but borrowers benefit.

Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the

level of total spending.

Most economists agree that the immediate determinant of the volume of output and employment is the

level of total spending.

The economizing problem faced by society is essentially one of deciding how to make the best use of

limited economic resources to satisfy unlimited economic wants.

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the

marginal cost of waiting is greater than the marginal benefit of eating in that restaurant

The presence of discouraged workers

may cause the official unemployment rate to understate the true amount of unemployment.

Which of the following would not be classified as an economic resource by economists?

money in a business checking account

Given the information, and assuming trade occurs between the three states, we can expect

money to flow counter-clockwise from Michigan to Texas to Washington.

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B,

mutually advantageous specialization and trade between A and B may still be possible.

"Depression means idleness. And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the

noneconomic costs of unemployment.

Other things equal, an increase of corporate bonds from $140 billion to $150 billion in the economy would

not change the size of the public debt.

demand-pull inflation

occurs when total spending exceeds the economy's ability to provide output at the existing price level.

The Latin term "ceteris paribus" means

other things equal

Another way of saying "ceteris paribus" is

other things equal.

For economists, the word "utility" means

pleasure or satisfaction.

Refer to the graph. The economy is initially at point 1. Which of the following events would cause a shift that would help offset the crowding-out effect? An increase in

profit expectations resulting from an increase in government spending.

Trade adjustment assistance

provides cash assistance for workers displaced by imports or plant relocations abroad.

If the monetary authorities want to reduce the monetary multiplier, they should

raise the required reserve ratio.

The terms of trade reflect the

ratio at which nations will exchange two goods.

A recession is a decline in

real GDP that lasts six months or longer.

A recession is defined as a period in which

real domestic output falls.

Refer to the diagram, in which Qf is the full-employment output. If the economy's current aggregate demand curve is AD3, it would be appropriate for the government to

reduce government expenditures or increase taxes.

In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions, the government should

reduce tax rates and/or increase government spending.

Refer to the diagram, in which Qf is the full-employment output. If aggregate demand curve AD1 describes the current situation, appropriate fiscal policy would be to

reduce taxes and increase government spending to shift the aggregate demand curve from AD1 to AD2.

Refer to the diagram. If the full-employment GDP is Y5, government should

reduce taxes and increase government spending.

Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment and actual GDP are each $400 billion, government can balance its cyclically adjusted budget by

reducing G by $20 billion.

(Last Word) Which of the following would not help to relieve the Social Security and Medicare shortfalls?

restricting immigration of skilled working-age adults

An expansionary fiscal policy is shown as a

rightward shift in the economy's aggregate demand curve.

Suppose that a person's nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105. The person's real income will

rise by about 15 percent.

In the United States, business cycles have occurred against a backdrop of a long-run trend of

rising real GDP.

"Offshoring" refers to

shifting work overseas that was previously done domestically.

Economic models do not reflect the full complexity of reality, but instead are based on

simplifications

The role of an assumption in an economic theory is to

simplify the complex reality.

If the output of product X is such that marginal benefit equals marginal cost,

the correct amount of resources is being allocated to X's production.

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

the diversification-for-stability argument

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves and survive?

the infant industry argument

Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if

the marginal benefit of the book is greater than its marginal cost.

A production possibilities curve shows

the maximum amounts of two goods that can be produced, assuming the full use of available resources.

The production possibilities curve is a graph of

the maximum combinations of products that can be produced with the available resources.

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

the military self-sufficiency argument

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that

the principle of increasing opportunity costs is relevant.

If a positive relationship exists between x and y,

the relationship will graph as an upsloping line.

Which of the following terms implies the greatest degree of confidence in an economic generalization?

theory

The idea in economics that "there is no free lunch" means that

there are opportunity costs involved even in free lunches.

Graphical analysis of tariffs reveals that

they increase domestic production of the good for which imports face tariffs.

The marginal cost curve is

upsloping because of increasing marginal opportunity costs.

Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature. If Kelly is using the scientific method to better understand ice cream buying habits, her next step is to

use the observed data to form a hypothesis about ice cream buying behavior.

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

wage rates and labor productivity are directly related.

The World Trade Organization

was established to resolve disputes arising under world trade rules.

If people expected that a fiscal policy in the form of a tax cut was temporary, then this policy's effect on the economy would tend to be

weaker

In what circumstances would lenders most benefit?

when there is an unanticipated decrease in inflation

Which of the following is an example of a land-intensive commodity?

wool

A procyclical fiscal policy, like those of many state and local governments in the United States, tends to

worsen recessions or inflation.

Government Spending Tax Revenues GDP Year 1 $800 $825 $4,000 Year 2 850 850 4,200 Year 3 900 875 4,350 Year 4 950 900 4,500 Year 5 1,000 925 4,600 The table contains budget information for a hypothetical economy. All data are in billions of dollars. In which year is there a budget surplus?

year 1

In the aftermath of the Great Recession, several governments engineered a negative nominal interest rate. Using the formula that relates nominal interest and real interest, negative nominal rates could imply any of the following, except

zero inflation premium and high positive real interest rates.