An article in a recent economics periodical asks the question: "Is low inflation worth it?" By "it," the article probably means
a. the loss of comparative advantage.
b. enduring externalities.
c. unemployment.
d. repealing the law of supply and demand.
e. the opportunity cost of higher interest rates.
c
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Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model?
a. The real risk-free interest rate and GDP Price Index remain the same. b. The real risk-free interest rate falls, and GDP Price Index falls. c. The real risk-free interest rate falls, and GDP Price Index stays the same. d. The real risk-free interest rate rises, and GDP Price Index falls. e. The real risk-free interest rate rises, and GDP Price Index rises.
To raise productivity, policymakers could
a. increase spending on education. b. provide tax credits to firms for capital improvements. c. fund research and development. d. All of the above are correct.