Pure rate of interest refers to the interest rate that:
A. Borrowers pay to lenders in their own family or circle of close friends
B. Serves solely as payment to lenders for giving up current use of their funds
C. Is the difference between the actual rate and the theoretical rate
D. Measures the compensation to lenders for taking on the risks involved
B. Serves solely as payment to lenders for giving up current use of their funds
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Which of the following is the best example of a normative question?
A. Will increasing the money supply affect interest rates? B. How does the market for corn work? C. Will the redistribution of income make society better off? D. How do prices affect the market for coffee?
An outward shift of the production possibilities curve demonstrates
A. a recession. B. economic growth. C. a cyclical shock. D. an increased rate of inflation.
Why is the Big Mac a good indicator of purchasing power parity?
What will be an ideal response?
The advantage of holding money as an asset is that
A. money earns interest. B. money is liquid. C. the value of money appreciates over time. D. money is safe from theft.