How was the practice of clipping coins during feudalism contributing to inflation? Who benefited from this inflation?
What will be an ideal response?
As peasants paid their taxes in gold coin, the prince would clip off some of the coin and use the clipping to mint new coins. The additional coins increase the money supply, but the output in the economy was essentially constant. The price level rose because there was “too much money chasing too few goods.” In this case, the inflation benefited the issuers of the coin (the feudal lords) and hurt the peasants.
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Which of the following is a direct implication of the view that childbearing is an economic decision?
(a) People will not have additional children unless they can earn a profit from doing so. (b) Social factors have no effect on childbearing decisions. (c) Compulsory education will increase fertility because educated children have the potential to earn higher salaries. (d) Fertility should fall with improved opportunities for women to work in jobs outside the home.
Easy monetary policy and tight fiscal policy lead to
A) high real interest rates. B) low real interest rates. C) roughly unchanged real interest rates. D) roughly unchanged real interest rates only when Ricardian equivalence holds; otherwise, low real interest rates.