Historically, Brazil has suffered higher and more variable rates of inflation than Venezuela
You would expect the short-run aggregate supply curve of Brazil to be ________ than that of Venezuela, and the short-run Phillips curve of Brazil to be ________ than that of Venezuela. A) flatter; flatter
B) flatter; steeper
C) steeper; flatter
D) steeper; steeper
D
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A contractionary monetary policy raises the real interest rate, causing the domestic currency to ________, thereby ________ net exports
A) appreciate; raising B) appreciate; lowering C) depreciate; raising D) depreciate; lowering
Loretta agrees to lend Ted $500,000 to buy computers for his consulting firm. They agree to a nominal interest rate of 8%. Both expect the inflation rate to be 2%
(a) Calculate the expected real interest rate. (b) If inflation turns out to be 3% over the life of the loan, what is the real interest rate? Who gains from unexpectedly high inflation, Loretta or Ted? (c) If inflation turns out to be 1% over the life of the loan, what is the real interest rate? Who gains from unexpectedly low inflation, Loretta or Ted?