Assume that Michael is interested in buying a lawn mower. Right now, interest rates are very high, but he believes they will soon start to fall. If Michael purchases the lawn mower today, we know that
a. he was concerned about future inflation.
b. the current inflation rate was low.
c. he paid an inflationary premium.
d. he had a strong, positive rate of time preference.
D
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Which of the following best illustrates the unit of account function of money?
A) You list prices for clothing sold on your Web site, www.nattydresser.com, in dollars. B) You pay for your cruise tickets with dollars. C) You keep $50 in your backpack for emergencies. D) You keep your tips earned from your tour guide job in a separate jar at home.
Expansionary fiscal policy can be used to reduce unemployment by
A) increasing long-run aggregate supply so as to raise real GDP. B) increasing aggregate demand so as to raise real GDP. C) reducing nominal wages so as to encourage firms to hire more workers. D) eliminating inefficiencies from labor markets.