The monetary policy (MP) curve indicates the relationship between
A) the Federal Funds Rate and the real interest rate.
B) the Federal Funds Rate and the inflation rate.
C) the inflation rate and the expected inflation rate.
D) the real interest rate the central bank sets and the inflation rate.
D
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More borrowing by firms in the domestic currency is one way to reduce currency mismatch. What would be the major issue if government insured repayment of the loans at a low cost?
A) There would be lots of new borrowing, and the production sector might not be able to keep pace. B) It would be too expensive. C) There could be a moral hazard problem with excessive risk taking. D) It is likely that no new borrowing would take place—firms need the incentive of tax breaks.
With perfect price discrimination, a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus
A) maximum; consumer B) minimum; producer C) maximum; producer D) minimum; consumer E) None of the above answers is correct.