1a. If an economy experiences a long period of unexpected deflation, who will bear the bigger cost – borrower or lender? 1b. If deflation in 1a) is expected, who will bear the bigger cost?

In the United States, nominal interest rates tend to move economy is experiencing Select one: A. procyclically, a recession B. procyclically; an expansion C. countercyclically; an expansion D. countercyclically; a recession nominal interest rates increase. This means that when the

Consider the following statements about the business cycle.   Which of the following statements is incorrect ?   A. A rise in economic activity from the cycle trough to the peak indicates that the economy is in an expansion.   B. A fall in economic activity from the cycle peak to the trough indicate that the economy is in a recession.   C. The business cycle is a regular fluctuation of real GDP around potential GDP that is predictable.   D. The business cycle is a periodic cycle in real GDP and employment.

Question 6 Which of the following are true about the nominal interest rate, i? There may be more than one answer. a) In the short-run, i is determined by the IS-LM system. b) In the long-run, i is determined by the IS-LM system. c) If expected inflation 7º drops, i must drop in the short-run. d) If expected inflation 7º rises, i must rise in the long-run.