If the Fed's policy is contractionary, it will
A) use open market operations to buy Treasury bills.
B) use open market operations to sell Treasury bills.
C) lower the discount rate.
D) lower the reserve requirement.
Answer: B
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Two countries, Rhodia and Rubium, have identical production functions of the form:
Y = A × K0.25 × H0.75 Both countries have the same amount of capital stock and use the same technology. However, the total efficiency units of labor available in Rhodia is higher than that in Rubium. Which of the following is likely to be true in this case? A) The poverty rate in Rhodia is likely to be higher than that in Rubium. B) The gross domestic product of Rhodia is higher than that in Rubium. C) The gross domestic product of Rubium is higher than that in Rhodia. D) The Human Development Index of Rhodia is lower than that of Rubium.
Which of the following is a definition of the real interest rate in a world with a positive inflation rate?
a. The percentage increase in the borrower's purchasing power from taking a loan b. The percentage decrease in the borrower's dollars from taking a loan c. The percentage increase in the lender's purchasing power from making a loan d. The percentage increase in the lender's dollars from making a loan e. The percentage decrease in the lender's dollars from making a loan