spanish

If the real interest rate is 4 percent, the inflation rate is 6 percent, and the tax rate is 20 percent, what is the after-tax real interest rate? a. 2 percent b. 1 percent c. 4 percent d. 3 percent e. 5 percent

a. 2 percent

If the nominal interest rate is 6 percent and the inflation rate is 3 percent, the real interest rate is a. 3 percent. b. 6 percent. c. 9 percent. d. 18 percent. e. none of the above.

a. 3 percent.

If money is neutral, a. a change in the money supply only affects real variables such as real output. b. the money supply cannot be changed because it is tied to a commodity such as gold. c. a change in the money supply reduces velocity proportionately; therefore, there is no effect on either prices or real output. d. an increase in the money supply does nothing. e. a change in the money supply only affects nominal variables such as prices and dollar wages.

e. a change in the money supply only affects nominal variables such as prices and dollar wages.

Which of the following statements about inflation is not true? a. If there is inflation, taxing nominal interest income reduces the return to saving and reduces the rate of economic growth. b. Unanticipated inflation redistributes wealth. c. Inflation reduces people's real purchasing power because it raises the cost of the things people buy. d. An increase in inflation increases nominal interest rates.

c. Inflation reduces people's real purchasing power because it raises the cost of the things people buy.

Which of the following costs of inflation does not occur when inflation is constant and predictable? a. menu costs b. costs due to inflation-induced tax distortions c. arbitrary redistributions of wealth d. shoeleather costs e. costs due to confusion and inconvenience

c. arbitrary redistributions of wealth

In the long run, inflation is caused by a. banks that have market power and refuse to lend money. b. governments that raise taxes so high that it increases the cost of doing business and, hence, raises prices. c. governments that print too much money. d. increases in the price of inputs, such as labor and oil. e. none of the above.

c. governments that print too much money.

Suppose that, because of inflation, a business in Russia must calculate, print, and mail a new price list to its customers each month. This is an example of a. shoeleather costs. b. arbitrary redistributions of wealth. c. menu costs. d. costs due to inflation-induced tax distortions. e. the Friedman rule.

c. menu costs.

The quantity equation states that a. money × price level = velocity × real output. b. money × real output = velocity × price level. c. money × velocity = price level × real output. d. none of the above is true.

c. money × velocity = price level × real output.

Velocity is a. highly unstable. b. the annual rate of turnover of business inventories. c. the annual rate of turnover of the money supply. d. impossible to measure. e. the annual rate of turnover of output.

c. the annual rate of turnover of the money supply.

In the long run, the demand for money is most dependent upon a. the availability of banking outlets. b. the interest rate. c. the level of prices. d. the availability of credit cards.

c. the level of prices.

If the price level doubles, a. the quantity demanded of money falls by half. b. the money supply has been cut by half. c. nominal income is unaffected. d. the value of money has been cut by half. e. none of the above is true.

d. the value of money has been cut by half.

When prices rise at an extraordinarily high rate, it is called a. deflation. b. hyperinflation. c. hypoinflation. d. inflation. e. disinflation.

hyper inflation

Suppose that, because of inflation, people in Brazil economize on currency and go to the bank each day to withdraw their daily currency needs. This is an example of a. shoeleather costs. b. costs due to inflation-induced tax distortions. c. menu costs. d. costs due to inflation-induced relative price variability, which misallocates resources. e. costs due to confusion and inconvenience.

a. shoeleather costs.

If actual inflation turns out to be greater than people had expected, then a. wealth was redistributed to borrowers from lenders. b. no redistribution occurred. c. the real interest rate is unaffected. d. wealth was redistributed to lenders from borrowers.

a. wealth was redistributed to borrowers from lenders.

Suppose the nominal interest rate is 7 percent while the money supply is growing at a rate of 5 percent per year. Assuming real output remains fixed, if the government increases the growth rate of the money supply from 5 percent to 9 percent, the Fisher effect suggests that, in the long run, the nominal interest rate should become a. 9 percent. b. 11 percent. c. 16 percent. d. 12 percent. e. 4 percent.

b. 11 percent.

An inflation tax is a. an explicit tax paid quarterly by businesses based on the amount of increase in the prices of their products. b. a tax on people who hold money. c. a tax on people who hold interest-bearing savings accounts. d. usually employed by governments with balanced budgets. e. none of the above.

b. a tax on people who hold money.

If the money supply grows 5 percent, and real output grows 2 percent, prices should rise by a. 5 percent. b. less than 5 percent. c. more than 5 percent. d. none of the above.

b. less than 5 percent.

An example of a real variable is a. the nominal interest rate. b. the ratio of the value of wages to the price of soda. c. the price of corn. d. the dollar wage. e. none of the above.

b. the ratio of the value of wages to the price of soda.

The quantity theory of money concludes that an increase in the money supply causes a. a proportional increase in velocity. b. a proportional increase in real output. c. a proportional decrease in velocity. d. a proportional increase in prices. e. a proportional decrease in prices.

d. a proportional increase in prices.

Countries that employ an inflation tax do so because a. the government doesn't understand the causes and consequences of inflation. b. an inflation tax is the most equitable of all taxes. c. an inflation tax is the most progressive (paid by the rich) of all taxes. d. government expenditures are high and the government has inadequate tax collections and difficulty borrowing. e. the government has a balanced budget.

d. government expenditures are high and the government has inadequate tax collections and difficulty borrowing.