Suppose a representative household holds a bond that is expected ...

[crobinson2013]

Suppose a representative household holds a bond that is expected to pay a real return of 100 one year from now. However, over the next year, the inflation rate rises 15 percent more than was originally anticipated. As a consequence:
 a. the real value of household wealth will increase.
  b. consumption spending will increase, and aggregate demand will rise.
  c. the purchasing power of money will rise.
  d. savings will fall and aggregate expenditures will rise.
  e. the aggregate expenditure in the economy will decrease.

Question 2

A good economic theory:
 a. rests on realistic assumptions.
 b. explains economic behavior and predicts well.
 c. can best be expressed mathematically.
 d. always provides a highly detailed analysis of an economic sector.

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Answer to Question 1

e

Answer to Question 2

b

[crobinson2013]

Thank you

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No problemo