Suppose that the nominal rate of interest is holding steady at 2 percent even as the anticipated rate of inflation rises. What is happening to the real rate of interest?
A) It is unchanged.
B) It is increasing.
C) It is decreasing.
D) It equals the nominal interest rate.
Answer: C
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Which of the following goods is rival in consumption and is also excludable?
A) A fireworks display B) A movie shown on cable television C) A DVD D) A magic show in a public park.
Based on most observations, what are the effects on government budgets from the national health care program?
A) Tax revenues will not flow into the new program immediately. B) The federal government ultimately will have to search for ways to reduce its health care expenditures. C) Federal government expenditures on the program are being phased in immediately. D) the federal government ultimately will lower taxes since the program's cost will decline over time.
Which of the following would decrease the size of a federal budget deficit?
a. A recession b. An increase in defense spending c. An increase in the use of automatic stabilizers d. An increase in taxes e. An increase in transfer payments
Monopolistic competitors and perfect competitors are alike in
A. having horizontal demand curves. B. zero economic profit in the short run. C. zero economic profit in the long run. D. relying on advertising to attract buyers to their products.