Deflation is:
A. a sustained rise in the aggregate price level.
B. negative inflation.
C. as common as inflation.
D. a decline in inflation.
B. negative inflation.
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Pavel is considering buying a $10,000 bond with no expiration date that generates yearly payments of $500. If the price of the bond were to fall to $9,000:
A. the bond's rate of return would rise from 5 percent to 5.6 percent. B. the bond payments would fall to $450 per year. C. Pavel should definitely buy the bond because the price is lower. D. Pavel should definitely not buy the bond because the lower price means it is worth less.
If the quantity of money demanded exceeds the quantity supplied, the
A. interest rate will fall. B. demand-for-money curve will shift to the right. C. interest rate will rise. D. supply-of-money curve will shift to the left.