The nominal interest rate on a loan with an annual inflation rate of ? and a real interest rate i is represented as:
a. i+?i?
b. i+??i?
c. i+??i?
d. i+?-i?
C
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Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. What is the value of the consumer surplus enjoyed by her customers?
A) $39 B) $28 C) $11 D) $0
Bette's Breakfast, a perfectly competitive eatery, sells its "Breakfast Special" (the only item on the menu) for $5.00. The costs of waiters, cooks, power, food etc. average out to $3
95 per meal; the costs of the lease, insurance and other such expenses average out to $1.25 per meal. Bette should A) close her doors immediately. B) continue producing in the short and long run. C) continue producing in the short run, but plan to go out of business in the long run. D) raise her prices above the perfectly competitive level. E) lower her output.
The term inflation is used to describe a situation in which
a. the overall level of prices in the economy is increasing. b. incomes in the economy are increasing. c. stock-market prices are rising. d. the economy is growing rapidly.
________ occurs when economic benefits are distributed fairly
A) Productive efficiency B) Allocative efficiency C) Equality D) Equity