23. Suppose that you invest $5,000 at the bank. The bank offers you an annual interest rate of 5%. Annual Inflation is 4%. After a
23. Suppose that you invest $5,000 at the bank. The bank offers you an annual interest rate of 5%. Annual Inflation is 4%. After a year, how much is your return in real terms? (A) $50. (B) $100. (C) $200 (D) $250. 24. Newspaper and government sources often cite 'core' CPI, a Consumer Price Index that does not Include volatile items like gasoline and food. Why is this a misleading measure? (A) It can overstate inflation. (B) It can understate inflation. (C) It misrepresents the volatility of consumer prices. (D) All of the above. 25. The government needs to raise more money for public projects, and issues bonds to do so. What does this do in the market for bonds? (A) Yields rise and prices fall; quantity goes up. (B) Yields fall and prices rise; quantity goes up. (C) Yields rise and prices fall; quantity goes down. (D) Yields rise and prices fall; quantity goes down. 26. Suppose that the government controls the economy and sets prices in every market. What will happen? (A) Record unemployment and high energy prices. (B) Shortages and surpluses in most markets. (C) Optimal social market value, (D) Targeted subsidies to remedy misallocations
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