When an Increase in the Money Supply Is Unexpected by Firms

question 79

Multiple Choice

When an increase in the money supply is unexpected by firms and workers,real GDP:

• A) increases in the short run.
• B) decreases in the short run.
• C) increases in the long run.
• D) decreases in the long run.

Evaluate the degree of interest rate risk associated with bonds of different maturities and coupon rates.

Understand and calculate the real rate of return on bonds, considering inflation.

Determine the number of bonds a company must sell to raise a specific amount of capital, taking into account the yield.

Recognize the concept of bond duration and its implications for interest rate risk.

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Definitions:

Import

The act of bringing goods or services into one country from another country for sale or use.

Export

Products or services traded or sold from one nation to another.

Consumer Surplus

The gap between the price consumers are prepared to pay for a product or service and the amount they end up spending.

Autarky

A situation where a country is self-sufficient and does not engage in international trade.