Which of these trends in the nominal and real interest rates has been observed in the U.S. economy?
a. During the recession of 2009, the nominal interest rate was almost equal to the real interest rate.
b. In the mid 1970s, the nominal interest rate
was very low while the real interest rate was very high.
c. In the mid 1990s, the nominal interest rate was almost equal to the real interest rate.
d. In the 1980s, the real interest rate was very low while the nominal interest rate was very high.
Answer: a
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Which of the following is an example of securitization?
A) a bank bundles a group of mortgage loans and sells the bundle to investors B) an investor sells his shares of stock and uses the proceeds to purchase Treasury bonds C) a household deposits cash in a savings account that is insured by the FDIC D) a government chooses to only purchase Treasury securities from other governments that are financially sound
Items counted in U.S. GDP, but excluded from U.S. GNP, are
a. the value of the automobiles produced by a General Motors plant in Spain b. U.S. assets abroad c. income earned by U.S. citizens working in foreign economies d. a Nissan plant's output in Tennessee e. a Foot Locker's sales at its new store in Edmonton, Canada
The crowding-out effect stresses that
a. an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions. b. an increase in taxes will restrain aggregate demand and, thereby, help to control inflation. c. additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise. d. a budget deficit is a highly effective tool with which to combat recessions. e. both a and d are correct.
The economy can operate
A) beyond its institutional PPF but not beyond its physical PPF. B) on both its institutional PPF and its physical PPF, but not at the same time. C) under its physical PPF but not under its institutional PPF. D) a and b E) a, b, and c