Suppose you place $10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If you expect inflation to be 5 percent or lower, then you are expecting to earn a real interest rate of at least:
a. 1.6 percent.
b. 4 percent.
c. 5 percent.
d. 3 percent.
d
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In order to maximize profits, a firm should produce at the output level for which
a. average cost is minimized. b. marginal revenue equals marginal cost. c. marginal cost is minimized. d. price minus average cost is as large as possible.
An advance in technology which increases labor productivity will shift the:
a. labor demand curve to the left. b. MFC curve to the left. c. MP curve downward. d. labor demand curve to the right. e. product demand to the right.
The reason economists create a market basket is to:
A. track its changing prices to reflect changes in purchasing patterns of firms. B. see how the cost of buying the goods and services on the list changes over time. C. know how each individual consumer is being affected by changing prices. D. get a sense of how people buy items on a weekly basis.
Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. When these two individuals engage in trade, it would be advantageous for both if:
a. Bob specializes in the production of toys and Bill specializes in car repairing. b. Bob specializes in car repairing and Bill specializes in the production of toys. c. they specialize only in car repairing. d. they specialize only in the production of toys. e. they distribute their working hours evenly between the production of two goods.