If the asset market is to remain in equilibrium, then if the money supply increases, output is unchanged, the price level is unchanged, and the expected inflation rate is unchanged, then
A) the real interest rate must rise.
B) the real interest rate must decline.
C) the nominal interest rate must rise.
D) the inflation rate must rise.
B
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A model or theory in economics is:
A) based mostly on value judgments. B) built using relevant observations, assumptions, and abstractions. C) only useful if it correctly portrays the real world and its complexities. D) useful only if it is based on normative economic statements.
If the average productivity of American firms is rising more quickly than the average productivity of Indian firms, which of the following would you expect to see? (India's currency is the rupee.)
A) an increase in the value of the rupee relative to the dollar B) a decrease in the quantity demanded of Indian products relative to American products C) a decrease in the prices of Indian products D) an increase in the quantity demanded of Indian products relative to American products