Subtracting the inflation rate from the nominal rate of interest tells you the:
A. nominal rate of return.
B. real interest rate.
C. real rate of inflation.
D. price level of the economy.
AACSB: Analytical Thinking
B. real interest rate.
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Markets provide
A) information. B) prices. C) incentives. D) all of these choices.
Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?
a. air quality in New York City b. water pollution caused by a large number of firms at a location near the same river c. noise pollution from aircraft near a busy airport d. all of the above
Other things the same, when an economy increases its saving rate
a. consumption and production rise now. b. consumption rises now and production rises later c. consumption falls now and production rises later. d. consumption falls now and production falls later.
Which of the following is the best example of a precommitment used to overcome time inconsistency
A. Finding a running partner and setting a regular schedule of when you will run together. B. Deciding to save a percentage of each month's paycheck. C. Signing up for a free trial membership at the local gym. D. Buying an alarm clock.