The nominal interest rate is eight percent and the consumer price index rises from 140 to 147 . What is the real interest rate?
3%
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What are liabilities?
A) anything of value owned by a person or a business B) only those unpaid expenses for which a business or person is making interest payments C) the total cost of labor for a firm D) anything a person or a business owes to entities outside the business
From the new classical perspective, the disinflation in the early 1980s resulted in a significant recession because
a. the policy change to disinflation was unanticipated. b. the policy was not credible. c. inflationary expectations were backward looking. d. None of the above e. both a and b.
All of the following statements, except one, are correct in short-run equilibrium for both a single-price monopolist and a monopolist that practices perfect price discrimination. Assume that both firms are able to earn at least a normal profit. Which statement is the exception?
a. Both face downward-sloping demand curves for their output. b. Both produce all output units for which marginal revenue exceeds marginal cost. c. Both produce in the range where marginal revenue is positive. d. Both are price setters. e. Both produce an output level for which price exceeds marginal cost.
What is the crucial difference between inflation generated on the demand side versus inflation generated on the supply side?
a. Demand-side inflation is short-lived, while supply-side inflation lasts for a long time. b. Demand-side inflation leads to budget surpluses, while supply-side inflation contributes to budget deficits. c. Supply-side inflation is subject to control of policy makers, while demand-side inflation is beyond their reach. d. Demand-side inflation is normally accompanied by rising real GDP, while supply-side inflation may be accompanied by falling real GDP.