If the real rate of return is 2 percent, and the inflation rate is 2 percent, then the nominal interest rate must be:
A. 4 percent.
B. 2 percent.
C. ?2 percent.
D. ?4 percent.
A. 4 percent.
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An assumption used in the quantity theory of money is that
A) velocity is constant. B) the money supply is constant. C) nominal Gross Domestic Product (GDP) is constant. D) the price level is constant.
Why is the principal-agent problem less likely when getting a haircut than when getting a car repaired?
a. Haircuts are less expensive than car repairs. b. There are no hidden actions when getting your hair cut. c. There are no hidden actions when getting your car repaired. d. Auto mechanics are less honest than hair stylists. e. There is no principal-agent relationship in car repair.
Due to the impact of diminishing marginal returns, all costs are fixed in the long run
a. True b. False Indicate whether the statement is true or false
As people buy more and more of a service, their consumer surplus
A. increases. B. decreases. C. falls to zero. D. becomes negative.