The real rate of interest equals 5% and the expected rate of inflation equals 2%. The nominal rate of interest equals
A) 2%.
B) 3%.
C) 5%.
D) 7%.
D
You might also like to view...
Which of the following is the largest source of revenue for the federal government?
A. corporate income tax B. payroll tax C. personal income tax D. user charges
The more inelastic the consumer demand for the final product, the
A) greater will be the economic profit in a competitive market. B) greater the impact on employment from a change in the wage rate. C) more inelastic the demand for labor producing the product. D) more responsive the output demand to a change in the price of labor.
Other things being equal, suppose that the demand for wheat in constant quality units increases. The increase in demand will cause
A. a higher equilibrium price and higher equilibrium quantity of wheat. B. a higher equilibrium quantity, but a lower equilibrium price of wheat. C. a surplus of wheat. D. fall in the market clearing price of corn, a substitute for wheat.
A major difficulty with the infant industry argument for protection is that
A) government revenue will fall with a tariff. B) it requires the nation to fall into the large country case for tariff protection. C) effective rates of protection are usually greater than nominal rates. D) the measurement of production externalities is difficult and uncertain.