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Unformatted text preview: ods such as business equipment was $10,000, inventory rose $1,000, and construction of new homes was $5,000. Consumption was $65,000 and taxes were $15,000. What was public saving? A. –$13,000 B. –$3,000 C. –$6,000 D. –$12,000 E. [None of the above] 3. Jimmy borrows $20,000 from the bank and pays back principle and interest of $21,600 one year later. If the inflation was 5% over the year, then the bank’s real return was ________ . A. 5% B. 13% C. 8% D. 10% E. [None of the above] 4. Inflation is an increase in the A. overall price level. B. amount of money in circulation. C. overall level of economic activity. D. [All of the above] 5. An increase in ________ will increase productivity. A. technology B. human capital per worker C. physical capital per worker D. natural resources per worker E. [All of the above] 6. Which of the following is FALSE? A. Borrowers lose when inflation is higher than expected. B. Loan contracts specify the nominal interest rate. C. If inflation is higher...
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- Fall '08