Author Question: Assume that a firm has 100 million in real assets and 90 in real liabilities. If the price level ... (Read 39 times)

SAVANNAHHOOPER23 · **on:** Jun 30, 2018

Assume that a firm has 100 million in real assets and 90 in real liabilities. If the price level falls by ten percent, the real value of liabilities would ________.

A) fall to 81 million
B) change, but more information must be provided to determine the exact movement
C) remain unchanged
D) rise to 99 million

Question 2

In the absence of a financial system, the two-period model without taxes predicts that

A) consumption is more volatile that output.
B) consumption is as volatile as output.
C) consumption is less volatile than output.
D) We do not know.