Supposed people anticipate inflation will be 3 percent during the next several years. If this is true, when the real interest rate is 4 percent, what will be the nominal (money) interest rate?
What will be an ideal response?
7 percent
You might also like to view...
As a general rule, an increase in the capital available to a society
A. reduces the slope of the production possibilities frontier, making it shallower. B. increases the slope of the production possibilities frontier, making it steeper. C. shifts the production possibilities frontier outward, away from the origin. D. shifts the production possibilities frontier inward, toward the origin. E. makes the production possibilities frontier more bowed out.
If a household member is not in the labor force, it is because he or she has decided his or her time is more valuable in nonmarket activities.
Answer the following statement true (T) or false (F)
Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded
A) increases. B) decreases. C) does not change because there is no change in the money wage rate. D) increases only if the price level also decreases.
If a firm refuses to hire any minorities due to a personal prejudice, its profits will
a. not be affected. b. increase slightly. c. increase markedly. d. decrease.