Refer to Figure 4.3. All else equal, an increase in the government's budget deficit accompanied by a decrease in corporate taxes would cause which of the following shifts?
A) S1 to S2 and D1 to D2
B) S2 to S1 and D1 to D2
C) S1 to S2 and D2 to D1
D) S2 to S1 and D2 to D1
B
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Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a
a. shortage to exist and the market price of chocolate-dipped strawberries to increase. b. shortage to exist and the market price of chocolate-dipped strawberries to decrease. c. surplus to exist and the market price of chocolate-dipped strawberries to increase. d. surplus to exist and the market price of chocolate-dipped strawberries to decrease.
If a lender desires to earn a return of 4 percent on a loan and the anticipated rate of inflation is 3 percent, the lender should charge a
A. Real interest rate of -1 percent. B. Real interest rate of 1 percent. C. Nominal interest rate of -7 percent. D. Nominal interest rate of 7 percent.