Assume that the term structure effect and the default-risk premium remain unchanged and that households and firms have adaptive expectations
At the beginning of 2013, a bank is offering car loans at a nominal interest rate of 7% and the expected rate of inflation is 2 %, and at the beginning of 2014, the bank decreases the nominal interest rate to 5%. The real interest rate at the beginning of 2014 is A) 2%.
B) 3%.
C) 5%.
D) This cannot be determined without being given the expected inflation rate for 2014.
B
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What is the present value of $888 in a one year if the current rate of interest is five percent?
A) $4,440 B) $845.71 C) $177.60 D) none of these
The most appropriate type of labor market to analyze
a. is the world market b. is the national market c. is a regional market d. is a local market e. depends upon the purpose of the analysis
A less developed economy has greater income inequality the
a. less the economy is dependent upon agriculture b. smaller the middle class c. more the economy is dependent upon manufacturing d. less diverse the level of manufacturing activity e. greater the level of education in the country
Regarding poverty in U.S. society, it is correct to say that: a. Poverty affects a relatively small number of Americans. b. Poverty results from a failure to work hard
c. Most of the poor live in inner cities. d. None of these statements is true.