A perpetuity is distinguished from other bonds in that it
a. pays continuously compounded interest.
b. pays interest only when it matures.
c. never matures.
d. will be used to purchase another bond when it matures unless the owner specifies otherwise.
c
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The direction of change in the trade balance is uncertain because expansionary monetary policy may exert forces in the opposite direction. What are they?
A) An increase in income tends to lower the trade balance, whereas a fall in interest rates through depreciation tends to raise the trade balance. B) An increase in the supply of money raises interest rates, which lowers the trade balance, whereas the increase in the demand for money raises it. C) Exchange rates rise (depreciation) and expected exchange rates fall (appreciation). D) An increase in financial assets raises foreign inflows and raises the trade balance, whereas decreases in interest rates lower the trade balance.
To determine whether the goal of stable prices is being achieved, the Federal Reserve monitors
A) the core PCE deflator inflation rate. B) the core GDP deflator inflation rate. C) the GDP price deflator. D) the producer price index. E) the CPI.