If the nominal interest rate is 3% and the inflation rate is 6%, the real interest rate is
a. 2%
b. 3%
c. -3%
d. 9%
c
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What will be an ideal response?
An increase in the expected rate of inflation will:
A. lower the demand for real balances because the real interest rate will rise. B. lower demand for real balances because the nominal interest rate will rise. C. increase the demand for real balances because the real interest rate will fall. D. increase the demand for real balances because the nominal interest rate will rise.
An indifference curve represents combinations of two goods that provide an individual the same total utility.
Answer the following statement true (T) or false (F)
If competitive industry Y is incurring substantial losses, output will:
A. expand as resources move toward industry Y. B. contract as resources move toward industry Y. C. contract as resources move away from industry Y. D. expand as resources move away from industry Y.