If the value of your savings is increasing over time, it must be true that the inflation rate:
A. is higher than the nominal interest rate.
B. is lower than the nominal interest rate.
C. and the nominal interest rate are the same.
D. must be zero.
AACSB: Analytical Thinking
B. is lower than the nominal interest rate.
You might also like to view...
According to this Application, over time, as economies adapt to higher temperatures
A) approximately half the decline in per capita income disappears. B) per capita income does not seem to change. C) real income begins to increase and per capita income begins to decrease. D) approximately half the increase in per capita income disappears.
When we use the midpoint method to compute the price elasticity of demand we use
A) the original quantity and the average price. B) the original price and the average quantity. C) the average price and the average quantity. D) either the original or new price, and the average quantity. E) the average price and the original quantity.
If an investor had a $25,000 long-term capital gain on a $100,000 investment from 1984 to 2010, her real rate of return was most likely
a. equal to the expected rate of inflation. b. equal to the nominal rate of inflation. c. zero. d. negative.
Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that
a. foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. b. foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. c. the critics are correct, so countries must protect their industries with tariffs or quotas. d. foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.