Suppose that velocity and output are constant and that the quantity theory and the Fisher effect both hold. What happens to inflation, real interest rates, and nominal interest rates when the money supply growth rate increases from 5 percent to 10 percent?
Inflation and nominal interest rates each increase by 5 percent points. There is no change in the real interest rate or any other real variable.
Economics
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Answer the following statements true (T) or false (F)
1) A nation that realizes a 3 percent increase in its output per person is experiencing modern economic growth. 2) Output per person has grown steadily since the beginning of the Roman Empire. 3) China's GDP per person in 2011 was about one-third of U.S. GDP per person in the same year. 4) Economists refer to purchases of stocks and bonds as "investment."
Economics
If the government wanted to encourage savings by offering a tax break, such a policy would work if the supply curve for financial capital is
a. elastic. b. steep. c. inelastic.
Economics