Which of the following statements is correct?
A. For a given real interest rate, the nominal interest must decrease if expected inflation
increases
B. For a given nominal interest rate, the real interest will decrease if inflation decreases
C. For a given expected inflation rate, the nominal interest must increase if real interest
decreases
D. For a given real interest rate, the nominal interest must increase if expected inflation increases
D. For a given real interest rate, the nominal interest must increase if expected inflation increases
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If MPC = 0.8, a $200 billion increase in government purchases would have what size effect on the "first round" of induced added consumption, and what total effect on AD?
a. increase "first round" consumption by $80 billion; increase AD by $400 billion b. increase "first round" consumption by $160 billion; increase AD by $1 trillion c. increase "first round" consumption by $200 billion; increase AD by $1 trillion d. increase "first round" consumption by $800 billion; increase AD by $4 trillion
?For a mortgage lender that makes mortgage loans to borrowers, which one of the following would be an example of adverse selection?
a. After the loan has been made, individuals become careless with their finances
b. Individuals most likely to default are the ones most likely to apply for the loan
c. Borrowers investing their loan proceeds differently than the bank requires
d. None of the above