When the inflation rate is expected to be zero, Steve plans to lend money if the interest rate is at least 4 percent a year and Cindy plans to borrow money if the interest rate is no more than 4 percent a year. Steve and Cindy make a loan agreement for one year at an interest rate of 4 percent a year when the inflation rate is zero. But if Steve and Cindy expect an inflation rate of 1 percent a year, they would be willing to make a loan agreement at ________ a year
What will be an ideal response?
5 percent
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The labor supply curve shows the relationship between the
a. wage rate and the total quantity of labor demanded by firms b. wage rate and the total quantity of labor supplied by individuals c. wage rate and the total quantity of labor supplied by firms d. wage rate and the total quantity of labor demanded by individuals e. marginal revenue product of labor and the marginal physical product of labor
The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if the
a. supply of wheat is elastic. b. supply of wheat is inelastic. c. demand for wheat is inelastic. d. demand for wheat is elastic.
What is the relationship between real and nominal interest rates?
a. They are both different names for the same thing. b. The real interest rate is the rate stated on a loan. c. Real interest rate is calculated by subtracting inflation from nominal interest rate. d. Nominal interest rate is calculated by subtracting inflation from real interest rate.
Market power exists if a firm can alter:
a) The production function. b) Its own supply curve. c) The market price. d) Its costs of production.