Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent
If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent.
A) 8; 6 B) 8; 2 C) 0; 1 D) 8; 4 E) 6; 2
B
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How can banks increase the amount of loanable funds available for private lending?
(a) By selling government securities to securities dealers and the Federal Reserve System (b) By buying government securities from securities dealers and the Federal Reserve System (c) By buying stocks, property and other assets to hold on behalf of the banks (d) By holding 100 percent of customers' deposits in bank vaults
The invisible hand refers to the coordination that occurs from:
A. everyone working in his or her own self-interest. B. a government agency finding efficiencies. C. everyone working for the overall good of society. D. a government coordinating economic activity.