If expected inflation is 2%, the nominal interest rate is 7% and the economy is growing at a rate of 3%, the real interest rate is equal to
What will be an ideal response?
5%
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In the Keynesian cross diagram, a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift down, the equilibrium level of aggregate output to ________, and
the IS curve to shift to the ________, everything else held constant. A) rise; left B) rise; right C) fall; left D) fall; right
In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?
a. food & beverages b. recreation c. housing d. apparel
Which of the following explains the vicious circle of poverty?
a. By investing in education and infrastructure at the same time, the country can overcome the problems of poverty. b. Poverty arises out of the lack of investment, but they cannot invest because they are poor. c. A nation can shift its production possibilities curve inward by shifting more resources into the production of capital goods. d. A nation can shift its production possibilities curve outward by shifting more resources into the production of consumer goods.
Which of the following would not be a prediction from economic labor theory regarding the wage of a field hand?
A. Wages would increase as the price of wheat increased. B. Wages would decrease as interest rates rose. C. Wages would increase with the imposition of restrictions on immigration . D. Wages would decrease when the wheat thrasher increased harvesting productivity.