Suppose the government has a budget surplus of $2 billion. If there is no Ricardo-Barro effect, what occurs?
A) The demand for loanable funds curve shifts rightward, raising the interest rate, and increasing investment.
B) The supply of loanable funds curve shifts leftward, lowering the interest rate, and increasing investment.
C) The demand for loanable funds curve shifts leftward, lowering the interest rate, and decreasing investment.
D) The supply of loanable funds curve shifts leftward, raising the interest rate, and decreasing investment.
E) The supply of loanable funds curve shifts rightward, lowering the interest rate, and increasing investment.
E
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Suppose the CPI last year was 82.3 and this year is 90.9. Based on this information, we can calculate that the inflation rate in 1981 was
A) 10.4 percent. B) 8.6 percent. C) 90.9 percent. D) 82.3 percent. E) 9.09 percent.
Transaction costs are
A) all unnecessary and wasteful costs. B) any nonmonetary costs associated with a transaction. C) not real costs because they make no positive contribution to economic transactions. D) the costs of arranging agreements between demanders and suppliers. E) the opposite of opportunity costs.