The real rate of interest will approximately be equal to
A) the nominal interest rate plus the expected rate of inflation.
B) the stated rate of interest in a high-inflation economy.
C) the nominal interest rate minus the expected rate of change in the price level.
D) the stated rate minus the opportunity cost of capital.
Answer: C
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Inflation is a measure of the ________ of prices; the CPI is a measure of the ________ of prices.
A. current level; rate of change in the level B. index; base year's level C. base year's level; index D. rate of change in the level; current level
"Ricardian equivalence" is the proposition that it does not matter whether government expenditure is financed by taxes or by issuing debt
Indicate whether the statement is true or false
Figure 10-9
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Figure 10-9 shows supply and demand conditions in a perfectly competitive industry and for a firm in that industry. Assume the industry initially has supply curve S1 and demand curve D1. If demand shifts to D2, then in the short run price will
A. rise to A. B. rise to some level between A and B. C. remain at B. D. fall to C.
Suppose at the current level of labor used, MRP = $100 and MFC = $100. To maximize profits, the firm should
A) hire more labor. B) reduce the level of labor. C) maintain the current level of labor. D) shut down.