In which of the following situations would you prefer to be the lender?
A) The interest rate is 9 percent and the expected inflation rate is 7 percent.
B) The interest rate is 4 percent and the expected inflation rate is 1 percent.
C) The interest rate is 13 percent and the expected inflation rate is 15 percent.
D) The interest rate is 25 percent and the expected inflation rate is 50 percent.
B
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Suppose the government has a $1.2 trillion budget deficit. If the government borrows $1.2 trillion to finance this deficit and finances the rest by printing money, the amount of new money created will be
A) $0. B) $600 billion. C) $1.2 trillion. D) $2.4 trillion.
If the economy is in recession and the number of used baby clothing stores increases, then:
a. used baby clothes are a necessity. b. used baby clothes are an inferior good. c. used baby clothes are a normal good. d. new baby clothes are a luxury. e. used baby clothes have price-elastic demand.