If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent, then the real interest rate is
a. -8.4 percent.
b. -2.1 percent.
c. 3.7 percent.
d. 4.7 percent.
d
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If the prices of the goods and services contained in the CPI market basket increase from the base period to the next year, we know that
A) the market basket used by the BLS must be changed next year to reflect consumers' new expenditures. B) the next year's CPI will be below 100. C) the next year's CPI will be above 100. D) the inflation rate is falling. E) the cost of the CPI market basket at next year's prices is lower than the cost of the CPI market basket at base period prices.
The figure above shows the loanable funds market. If the real interest rate is 10 percent, then
A) there is a shortage in the loanable funds market. B) the government must intervene in order to prevent a credit crisis. C) the interest rate must increase. D) savers will exit the market because of the high opportunity cost of saving. E) there is a surplus in the loanable funds market.
Due to global warming, a country's climate has changed over the years. 30 years ago, it used to rain for almost three months. However, for the past two years, the rainy season has hardly lasted for two weeks. If this change in climate adversely affects agricultural productivity and crop yield, it will cause: a. the long-run aggregate supply curve to shift rightward
b. the long-run aggregate supply curve to shift leftward. c. an upward movement along the long-run aggregate supply curve. d. a downward movement along the long-run aggregate supply curve.
Transfer payments are payments to individuals for which nothing is currently rendered in return.
Answer the following statement true (T) or false (F)