If nominal interest rates have a lower bound of zero and deflation occurs at 3% (i.e., the inflation rate equals -3%, then the lowest real interest rate possible is
A. 0%.
B. -3%.
C. 6%.
D. 3%.
Answer: D
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If your planned consumption expenditure is $600 per month and your disposable income is $500 per month, your
A) induced consumption is $600. B) saving is $100 per month. C) dissaving is $100 per month. D) autonomous consumption is -$100 per month. E) autonomous consumption must be zero per month.
Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8-hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abe's opportunity cost of a pound of fruit
A) 6 minutes B) 3 hours a day C) 2 pounds of fish D) 0.5 pounds of fish
Bruce the Bank Manager can reduce interest rate risk by ________ the duration of the bank's assets to increase their rate sensitivity or, alternatively, ________ the duration of the bank's liabilities
A) shortening; lengthening B) shortening; shortening C) lengthening; lengthening D) lengthening; shortening
Which of the following terms refers to federal spending and borrowing causing interest rates to rise and business investment to fall?
a. recognition lag b. implementation lag c. legislative lag d. crowding out