Darla puts her money into a bank account that earns interest. One year later she sees that the account has 6 percent more dollars and that her money will buy 7.5 percent more goods
a. The nominal interest rate was 13.5 percent and the inflation rate was 7.5 percent.
b. The nominal interest rate was 13.5 percent and the inflation rate was 1.5 percent.
c. The nominal interest rate was 6 percent and the inflation rate was -1.5 percent.
d. The nominal interest rate was 6 percent and the inflation rate was 7.5 percent.
c
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What is cost-plus pricing? Why do some firms use cost-plus pricing even when the firms' managers have the resources to devise a pricing strategy that would result in greater profits?
What will be an ideal response?
Suppose a country, whose production and consumption of cell phones is large relative to the world market, has just entered the global market. If the country is a net-importer of cell phones, we would expect:
A. an increase in both world price and quantity of cell phones. B. a decrease in world price, and increase in world quantity of cell phones. C. an increase in world price and decrease in world quantity of cell phones. D. a decrease in both world price and quantity of cell phones.
The cross price elasticity of demand is measured by the
A. percentage change in the price of one good divided by the percentage change in the demand for another good. B. percentage change in the quantity demanded of one good divided by the percentage change in quantity demanded of another good. C. percentage change in the demand for one good divided by the percentage change in price of another good. D. percentage change in the price of one good divided by the percentage change in price of another good.
Suppose that an increased risk of mortgage defaults lowers the expected profitability of banks. Then we would expect to see
a. the demand for bank stocks rise which would raise the prices of bank stocks. b. the demand for bank stocks rise which would reduce the prices of bank stocks. c. the demand for bank stocks fall which would raise the prices of bank stocks. d. the demand for bank stocks fall which would reduce the prices of bank stocks.