What is the effect of the inflation tax?
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What is the short-run effect of tax cuts on aggregate demand and inflation?
Aggregate demand and inflation rates will both increase
Aggregate demand and inflation rates will both decrease
Aggregate demand will increase while inflation rate will decrease
Aggregate demand will decrease while inflation rate will increase
How are interest rates affected by inflation? Explain what the Fisher effect says about nominal and real rates and how each will change when the rate of inflation changes. Explain how a short run negative association been actual inflation and the real interest rate may be compatible with the Fisher effect. (Hint: distinguish between actual and expected inflation.)
What is the effect of interest rate hikes on unemployment and inflation?
Unemployment and inflation rates will both increase
Unemployment and inflation rates will both decrease
Unemployment rate will increase while inflation rate will decrease
Unemployment rate will decrease while inflation rate will increase