Comparing the situation of a nominal interest rate of 10 percent and an inflation rate of 9 percent with a nominal interest rate of 6 percent and inflation rate of 2 percent, consumers would borrow more in which situation? A. Nominal interest rate of 10 percent since the real interest rate is 9 percent. B. Nominal interest rate of 6 percent since the real interest rate is 2 percent. C. Nominal interest rate of 6 percent since the real interest rate is 4 percent. D. Nominal interest rate of 10 percent since real interest rate is 1 percent.
- The primary tools of fiscal policy are
- government expenditure and money supply
- government expenditure and taxation
- money supply and money demand.
- taxation and interest rates
- In a typical year, changes in government spending compared to overall spending are relatively
- well-timed.
- large.
- unpredictable.
- small.
- The time necessary for Congress to propose and pass a fiscal policy plan is called a(n)
- legislative lag.
- recognition lag.
- implementation lag.
- Each of these answers is correct.
- The time necessary for a fiscal policy plan to have an impact is called a(n)
- legislative lag.
- recognition lag.
- implementation lag.
- None of these answers is correct.
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