When the price level is rising at ______ and the real interest rate is 1 per-cent a year, the nominal interest rate is 3 percent a year
A. 4 percent a year
B. 3 percent a year
C. 2 percent a year
D. 1 percent a year
C The nominal interest rate equals the real interest rate plus the inflation rate, so if the nominal interest rate is 3 percent a year and the real interest rate is 1 percent a year, the inflation rate must be 2 percent a year.
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Suppose that a firm can invest $100 today in a project and receive $105 a year from today. There is no inflation, and the annual interest rate in the economy is 4%. The firm should
A) invest in the project because the opportunity cost is the same as the return on the investment. B) invest in the project because the opportunity cost is greater than the return on the investment. C) invest in the project because the opportunity cost is less than the return on the investment. D) not invest in the project because the opportunity cost is less than the return on the investment.
If C is consumption, I is investment, G is government purchases and NX is net exports, according to the expenditure approach, Y would stand for ________; and the national income identity could be written as ________
A) transfers; Y = C + I + G - NX B) CPI; Y = C + I + G + NX C) GDP; Y - C - I = G + NX D) income; Y = C - I - G + NX E) the real interest rate; Y = C + I + G + NX
Refer to the above table. At a wage rate of $23 per worker, the firm will choose to employ:
A. 2 workers
B. 3 workers
C. 4 workers
D. 5 workers
Migraine medicine increased in price by 6% causing a 1% increase in quantity supplied. Supply is
a. inelastic. b. elastic. c. unit elastic. d. elasticity.