The nominal rate of interest is
A) the same as the price level.
B) the real rate of interest minus the previous year's change in the price level.
C) the interest rate actually paid by the borrower.
D) lower than the real rate in a period of inflation.
Answer: C
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The expected effect of the Bush tax cuts would be a(n)
A. lower real interest rate. B. exchange rate depreciation. C. increased current account deficit. D. All of these responses are correct.
What is the relationship between the multiplier and the marginal propensities?
What will be an ideal response?
In Figure 9.2, if the consumption function shifts from C2 to C1, autonomous consumption
A. Decreases, and aggregate demand shifts to the left. B. Decreases, and aggregate demand shifts to the right. C. Increases, and aggregate demand shifts to the left. D. Increases, and aggregate demand shifts to the right.
Fixed investment includes
A. business spending on plant and equipment. B. expenses for training employees. C. business salaries. D. business spending on printing paper.