If the bank advertises 6 percent annual interest rate on a one-year certificate of deposit and you anticipate the rate of inflation to rise to 3 percent during the year, then the real rate of interest on the certificate of deposit is

In Figure 13-3 above, given the unstable demand for money and a stable commodity demand, a stable output level at C would best be promoted by

A) targeting interest rates by the Fed. B) decreasing taxes. C) increasing expenditures by the government. D) decreasing expenditures by the government.

Savers have less incentive to care what their bank is doing with their money because their deposits are federally insured. This is a problem of

a. nominal interest b. adverse selection c. moral hazard d. the winner's curse e. a positive externality