Which of the following statements is true concerning income inequality?
A. Developed countries have greater income inequality than developing countries.
B. Income is equally distributed in poor countries.
C. The free market produces an unequal distribution of income.
D. The government has no way to alter income inequality.
Answer: C
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Which of the following describes a situation in which, as the level of production of a good or service increases, the average cost of producing each individual unit decreases?
a. Arbitrage b. Economies of scale c. Privatization d. Deindustrialization
During the early 1980s, the U.S. economy experienced an increase in interest rates quoted on U.S. Treasury debt, business loans, and mortgages. At the same time the inflation rate gradually declined more than expected. What happened to ex ante versus ex post real interest rates during this period? Use the Fisher equation to support your answer.
What will be an ideal response?