Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 10 percent,
a. the lender benefits from inflation, while the borrower loses from inflation.
b. the borrower benefits from inflation, while the lender loses from inflation.
c. neither the borrower nor the lender benefits from inflation.
d. both the borrower and the lender lose from inflation.
c
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If average annual tuition at public 4-year colleges was $1,908 in 1990, when the CPI was 130.7, and $8,655 in 2012 when the CPI was 229.6, then the real cost of annual tuition
A) rose by 354 percent during that period. B) fell by 158 percent during that period. C) fell by 354 percent during that period. D) rose by 75.7 percent during that period. E) rose by 158 percent during that period.
The regression R2 is a measure of
A) whether or not X causes Y. B) the goodness of fit of your regression line. C) whether or not ESS > TSS. D) the square of the determinant of R.
Expansionary fiscal policy increases the level of aggregate demand through either increases in government ____________ or reductions in taxes.
a. spending b. salaries c. taxation d. involvement
Other things the same, which of the following would both make Americans more willing to buy Italian goods?
a. the nominal exchange rate falls, the price of goods in Italy falls b. the nominal exchange rate falls, the price of goods in Italy rises c. the nominal exchange rate rises, the price of goods in Italy falls d. the nominal exchange rate rises, the price of goods in Italy rises