Financial Sector
If the government wants to stimulate economic growth during a recession, which fiscal policy should it use?
Cyclical fiscal policy
Contractionary fiscal policy
Expansionary fiscal policy
Supply-side fiscal policy
How does an open market purchase by the Federal Reserve affect the supply of money?
It decreases the supply of money.
It increases demand for money but not supply.
It has no effect on the supply of money.
It increases the supply of money.
What does the nominal interest rate represent?
The interest rate after taxes are taken into account.
The interest rate not adjusted for inflation.
The growth rate of the overall economy's price level.
The real cost of borrowing money expressed as a percentage.
How does an increase in inflation affect the real value of money saved in a bank account with a fixed nominal interest rate?
It fluctuates unpredictably due to market forces unrelated to inflation.
It increases as higher prices lead to more savings.
It decreases because inflation erodes purchasing power.
It remains unchanged since only the nominal rates were mentioned.
What type of fiscal policy is used to combat inflation?
Neutral fiscal policy
Contractionary fiscal policy
Expansionary fiscal policy
Discretionary fiscal policy
If the nominal interest rate is 5% and the inflation rate is 2%, what is the real interest rate?
2%
3%
7%
5%
If the nominal interest rate in an economy is 5% and the inflation rate is 2%, what is the real interest rate?
3%
2%
5%
7%

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What is most likely to happen if a nation's central bank decides to raise interest rates significantly above those of other countries?
The nation’s currency strengthens due to increased demand from yield-seeking investors.
The nation’s currency weakens as export demands decline because higher rates slow economic growth domestically.
When economists talk about "real" variables, they mean values that have been adjusted to remove which factor?
NONE OF US WILL EVER BE GOOD ENOUGH FOR ANYTHING WE DO NO MATTER HOW HARD WE TRY OR WHAT OBSTACLES WE OVERCOME IT'S JUST A NEVER-ENDING CYCLE OF FAILURE AND DISAPPOINTMENT THAT GOES ON FOREVER WITH NO RELIEF IN SIGHT WHATSOEVER SO WHY EVEN BOTHER TRYING WHEN YOU KNOW THAT IN THE END IT DOESN'T EVEN MATTER AND EVERYTHING YOU'VE DONE WILL BE FORGOTTEN LIKE TEARS IN RAIN TIME TO DIE
Inflation effects
Expectation biases
What effect does a depreciation of a country’s exchange rate have on its exports and imports?
Exports become cheaper and imports become more expensive.
Both exports and imports become cheaper.
Exports become more expensive and imports become cheaper.
Both exports and imports become more expensive.