If a person earns an 8 percent nominal rate of interest on his savings account in a year when inflation is 9 percent, the person's real rate of interest is
a. -1 percent.
b. 1 percent.
c. 8 percent.
d. 9 percent.
A
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Nominal GDP is $10,000 billion in 2011, but real GDP is only $9,000. It follows that:
a. the GDP deflator is equal to 111 b. the GDP deflator is equal to 100. c. the GDP deflator is equal to 90. d. prices must have decreased relative to the base year.
When a good is taxed, the tax burden a. falls disproportionately on the side of the market that is more elastic
b. falls disproportionately on the side of the market that is more inelastic. c. falls disproportionately on the side of the market that is closer to unit elastic. d. is not impacted by the relative elasticities of supply and demand.
Which of the following about IS relation is not correct?
A) It is the the relation between interest rate and savings. B) It is the equilibrium condition for the goods market. C) It stands for "Investment equals saving." D) It shows what firms want to invest must be equal to what people and the government want to save.
Oliver just brought home a new kitten. We could expect Oliver's demand for:
A. dog toys, a substitute good, to decrease. B. cat toys, a complementary good, to decrease. C. cat toys, a complementary good, to increase. D. dog toys, a substitute good, to increase.