Which of the following is not a cost posed by inflation?
A) Firms must pay for changing prices on products and printing new catalogs.
B) The money that consumers and firms hold loses its purchasing power.
C) Banks can lose if they under predict inflation and charge an interest rate that does not completely compensate for inflation.
D) Inflation reduces the affordability of goods and services to the average consumer.
D
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Suppose the Fed wants to increase the money supply. The most frequent way used to do this is
a. increase the discount rate b. decrease the prime rate c. buy US corporate stock from banks d. buy US govt bonds from banks
In the Harrod-Domar growth model, if 12.5% of income is saved, the incremental capital output ratio is 2.5 and the rate of depreciation is 4%, what is the implied rate of growth?
What will be an ideal response?