If the nominal interest rate is 5 percent and there is no inflation, then the real interest rate:
A. exceeds 5 percent.
B. is less than 5 percent.
C. is 5 percent.
D. is zero.
Answer: C
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The concept of inferior goods can be used to show that
A) lower prices signal poorer quality. B) indifference curves can have positive slopes. C) being able to consume more of all goods does not mean that a person will consume more of every good. D) consumers will always buy more of all products if their incomes increase.
In an effort to balance the federal budget, an increase in Social Security taxes is passed. What is the most likely effect of this on equilibrium GDP?
a. GDP will increase. b. GDP will decrease. c. GDP will not change but prices will rise. d. GDP will not change but employment will increase.
Why is a college graduate more likely to get a job in management than is someone with only a high school diploma, even when the job has nothing to do with a specific type of education?
The automatic adjustment mechanism that makes the economy move towards the long-run Phillips Curve is:
A. Expansionary fiscal or monetary policy B. Inflation expectations and wage adjustments C. Contractionary fiscal or monetary policy D. Increases in productivity over time