If the inflation rate is 3 percent and the real interest rate is 3 percent, then what is the nominal interest rate?
What will be an ideal response?
The nominal interest rate equals the real interest rate plus the inflation rate, or
(3 percent) + (3 percent) = 6 percent.
You might also like to view...
Suppose y = Ak1/3, the capital-labor ratio is $30,000 per worker, the level of total factor productivity is 400, 50% of the population works, and there are 50 million workers. Real GDP per capita is
A) $4,930.85. B) $6,212.33. C) $7,765.41. D) $9,033.96.
In the life-cycle hypothesis, a person who expects to work for R years earning Y dollars per year, and live for a total of L years, will consume ________ per year
A) RY - (L - R)Y B) LRY C) (L - R)Y D) (R/L)Y
The natural rate of unemployment is higher in Europe than in the U.S. due to ________
A) the greater relative strength of American unions B) the greater relative generosity of U.S. unemployment benefits C) the greater severity of the business cycle in Europe relative to the U.S. D) stricter European work rules
All of the following are possible ways to avoid price wars EXCEPT:
a. customer segmentation with revenue management b. growing the market c. reference prices and framing effects d. to not start one e. a through c f. a through d Indicate whether the statement is true or false