If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the inflation rate is:
A. 18 percent.
B. 24 percent.
C. 12 percent.
D. 6 percent.
C. 12 percent.
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Approximately, the real interest rate ________ the inflation rate ________ the nominal interest rate
A) plus; equals B) equals; plus C) equals; minus D) minus; equals
Increases in real GDP would overstate the increase in the well-being of a country over time if, over that time period, the
A) price level increased. B) amount of pollution decreased. C) crime rate decreased. D) average hours worked per week increased.
Suppose the velocity of money is not fixed, but stable at about two percent growth per year
How could the quantity theory of money be modified to include a stable growth rate of the velocity of money? In this modified quantity theory of money with velocity growing at two percent per year, what would the growth rate of the other variables in the theory need to be to cause inflation?
Which of the following would cause aggregate demand to decrease?
A) The government increases taxes on both business and personal income. B) A drop in the foreign exchange value of the dollar C) The Fed increases the amount of money in circulation. D) Businesses and households believe that the economy is headed for good times, so they begin to feel increased security about their jobs.