With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6 percent. But, if the rate of inflation was anticipated to be 4 percent, the bank would most likely charge the firm an annual interest rate of:

The short-run aggregate supply curve is upward sloping because in the short run the

A) money wage rate changes but the price level does not. B) price level changes but the money wage rate does not. C) both the money wage rate and the price level change. D) neither the money wage rate nor the price level can change.

Recent legislation provides parents with a substantial reduction in their personal income tax liability for each child that they have. The economic way of thinking indicates that legislation of this type will

a. make it more costly for parents to provide for their children. b. reduce the value of children to their parents and, therefore, lead to a reduction in the birth rate. c. reduce the after-tax cost of raising children and, therefore, increase the birth rate. d. exert no impact on either the cost of raising children or the birth rate since having children is a not an economic activity.