For a given real interest rate, an increase in inflation makes the after-tax real interest rate
a. decrease, which encourages savings.
b. decrease, which discourages savings.
c. increase, which encourages savings.
d. increase, which discourages savings.
b
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Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is
A) $325. B) $200. C) $125. D) $75.
Smith argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States. Smith is
A) advancing the foreign export subsidies argument for protectionism. B) making the mistake of believing that high wages mean high costs. C) advancing the antidumping argument for protectionism. D) making the mistake of believing that productivity is higher in foreign countries than in the United States. E) none of the above