QN=226 (17949) Given a nominal interest rate of 6 percent, in which of the following cases would you earn the highest after-tax real rate of interest?

ECO 10

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20 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
a. (i) Inflation is 2.5 percent; the tax rate is 25 percent
b. (ii) Inflation is 3 percent; the tax rate is 20 percent.
c. (iii) Inflation is 2 percent; the tax rate is 30 percent.
d. The after-tax real interest rate is the same for all of (i), (ii) and (iii).
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
QN=227 (17935) The shoeleather cost of inflation refers to
a. the redistributional effects of unexpected inflation.
b. the time spent searching for low prices when inflation rises.
c. the waste of resources used to maintain lower money holdings.
d. the increased cost to the government of printing more money.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
QN=228 (17953) High and unexpected inflation has a greater cost
a. for those who save than for those who borrow.
b. for those who hold a little money than for those who hold a lot of money.
c. for those whose wages increase by as much as inflation, than those who are paid a fixed nominal wage.
d. for savers in low income tax brackets than for savers in high income tax brackets.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
QN=229 (17937) If P denotes the price of goods and services measured in terms of money, then..
a. (i) 1/P represents the value of money measured in terms of goods and services
b. (ii) P can be interpreted as the inflation rate
c. (iii) the supply of money influences the value of P, but the demand for money does not.
d. All of (i), (ii), and (iii) are correct.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
QN=230 (17942) You put money into an account and earn an after-tax real interest rate of 2.5 percent. If the nominal interest rate on the account is 8 percent and the inflation rate is 2 percent, then what is the tax rate?
a. 28.00 percent
b. 36.25 percent
c. 43.75 percent
d. 67.50 percent
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
QN=231 (17946) Refer to Figure 30-2. Which of the following events could explain a shift of the money-demand curve from MD1 to MD2?
a. (i) an increase in the value of money
b. (ii) a decrease in the price level
c. (iii) an open-market purchase of bonds by the Federal Reserve
d. None of (i), (ii), and (iii) is correct.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
QN=232 (17931) Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS2; also suppose the economy's real GDP is 45,000 for the year. If the money market is in equilibrium, then the velocity of money is approximately
a. 4.5
b. 6.0
c. 9.0
d. 12.0
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