Econ 1305 Test 3
You put money in an account and earn a real interest rate of 4%. Inflation is 2%, and your marginal tax rate is 20%. What is your after-tax real rate of interest?
2.8 percent
Bob is looking for work after school, but everywhere he fills out an application, the managers say they always have a lot more applications than open positions. Tom has a law degree. Several firms have made him offers, but he thinks he might be able to find a firm where his talents could be put to better use.
Bob is structurally unemployed, and Tom is frictionally unemployed.
Imagine that in 2025 the economy is in the long run equilibrium. Then stock prices rise more than expected and stay high for sometime. In the short run what happens to the price level in the real GDP?
Both the price level and GDP rise
The price of important oil rises. If the government wanted to stabilize output which of the following could it due?
Increase government expenditures or increase the money supply
For employers have justify their actions as followed. Who's logic is not consistent with the logic or efficiency wage theory
Kay pays her workers less than the equilibrium wage so they won't have the time or money to look for somewhere else
Jennifer took out a fixed interest loan when the CPI was 100. She expected the CPI to increase to 103 but it actually increased to 105. The real interest she paid is
Lower than she had expected, and the real value of the loan is lower than she expected
If P=2 and Y= 1000, then which of the following pairs of values are possible?
M=500, V=4
If the price level rises above what what was expected and nominal wages are fixed, then
Production becomes more profitable so firms will hire more workers
People choose to hold a smaller quantity of money if
The interest rate rises, which causes the opportunity cost of holding money to rise
Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose chili imposes a $7 tariff on chips. Which of the following outcomes is possible?
The price of chips in Chile increases to $19; the quantity of Chilean produce chips increases; and the quantity of chips imported by chili decreases.
Which of the following would not be an expected response from a decrease in the price level and so help to explain the slope of the aggregate demand curve?
With prices down in wages fixed by contract, Fargo concrete company decides to lay off workers
The classical dichotomy and monetary neutrality are represented graphically by
a vertical long-run aggregate-supply curve.
The classical dichotomy refers to the idea that the supply of money
determines nominal variables, but not real variables.
Fiscal policy Refers to the idea that aggregate demand is affected by changes in
government spending and taxes
The costs of change in price tags in price listings are known as
menu costs
Other things the same, when price level rises, interest rates
rise, so firms decrease investment
If the interest rate is below the feds target, the Fed would
sell bonds to decrease the money supply
