"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?
What will be an ideal response?
The statement is false. The real interest rate equals the nominal interest rate minus the inflation rate, not divided by it.
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The growth of the Euromarkets resulted in
a. developing-country governments borrowing from European banks instead of American and Japanesebanks b. higher interest rates in Europe than in the U.S. and Japan c. a general trend toward substituting foreign aid for bank lending d. a general trend toward substituting bank lending for foreign aid e. none of the above
For the past three years, you have earned economic profits of $5,00 . per year by being the only vendor selling bottled tap water at your town's Fourth of July celebration. When you go to city hall to apply for a vending permit for this year's
celebration, the city clerk mentions that fifty new firms have received permits to sell tap water this year. a . What can you do to protect your economic profit in the short run? b. What can you do to protect your economic profit in the long run?
Define the following terms and explain why they are important in the study of economics
a. efficient allocation b. laissez faire c. peak pricing d. input-output analysis e. coordination tasks
Refer to the accompanying figure. If this economy were currently operating at point D, then in order to make more movies:
A. the first productive resources to switch to making movies should be those with the highest opportunity cost of making milk. B. no productive resources would need to switch from making milk to movies because point D is already efficient. C. the first productive resources to switch to making movies should be those with the lowest opportunity cost of making milk. D. no productive resources would need to switch from making milk to movies because each resource should continue to be used according to its comparative advantage.