ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 7, Problem 3.9P
To determine
The effect of an increase in the expected inflation in the equilibrium in the loanable funds market.
Concept introduction:
Expected Inflation- This refers to the anticipated increase in the level of prices over a given period of time resulting from the subjective views about price trends in future. In other words, prices today are affected by what they may be tomorrow culminating into expected inflation.
Fisher Effect
In the late 1930s, U.S. economist Irving Fisher established an economic hypothesis
This implies that the nominal or the current interest rate is the real interest rate adjusted for the rate of inflation.
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19-
In an economy there is a 15.2 % fall in the consumer spending on the same basket of goods and services between the years 2015 and 2016. This means that there is ____.
a.
Deflation
b.
Rise in Price level
c.
No change in price level
d.
Inflation
7. Prices and wages are considered ‘sticky’ if:
they do not fully adjust to changes in demand and supply.
their rates of increases and decrease are identical.
as prices increase, wages increase by the same percentage.
their rates of change are directly connected to rate of change in unemployment.
3- A country is said to be experiencing inflation when
A- the goods-market is rising over time
B- prices of all goods and services are rising over time
C- Total output is falling over time
D- prices of all goods and services are falling over time
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