If the long-run supply curve is horizontal, we know that this is
A) a decreasing-cost industry.
B) a constant-cost industry.
C) an increasing-cost industry.
D) a situation in which some input prices change as firms enter and exit the industry.
Answer: B
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Suppose the nominal interest rate is 15% and the rate of inflation is 3%. The real interest rate is therefore
A) 3%. B) 5%. C) 12%. D) 18%.
If government spending is held constant and Ricardian equivalence holds,
A) an increase in the government budget deficit is always matched by a reduction in private savings. B) an increase in government savings is always matched by an increase in the government budget deficit. C) an increase in government savings is always matched by an equal increase in private savings. D) an increase in government savings is always matched by an equal reduction in private savings.