Which of the following is incorrect?
A. The nominal interest rate is the rate of interest expressed in terms of current dollars.
B. The real interest rate is the rate of interest expressed in terms of dollars of constant or
inflation-adjusted value.
C. The nominal interest rate is the real interest rate less the rate of inflation.
D. During periods of inflation, the nominal interest rate will exceed the real interest rate.
Answer: C
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Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate ________ and the quantity of loanable funds ________
A) falls; decreases B) falls; increases C) rises; increases D) rises; decreases
The additional output a firm produces by hiring one more worker is called the marginal product of labor
Indicate whether the statement is true or false
A combination of high inflation and recession, usually resulting from a supply shock, is known as
A) hyperinflation. B) disinflation. C) stagflation. D) depression.
When both exports and imports are considered, the major advantage of international trade is that it allows us to:
a. sample foreign products that many of us would otherwise never see. b. consume a larger, more diverse quantity of goods and services at lower prices than would otherwise prevail. c. share our technology and efficiency with less-developed countries that would otherwise never have the opportunity to observe modern goods and services. d. maintain jobs for workers who would otherwise have little to do.