Suppose that, initially, the nominal interest rate is 6 percent and the inflation rate is 3 percent. If the inflation rate increases to 6 percent, what will be the new nominal interest rate?
A) 6 percent
B) 1 percent
C) 11 percent
D) 9 percent
D
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Government's use of eminent domain is a solution to
A) the problem of negative externalities. B) potential monopolization of a market. C) the holdout problem. D) the free-rider problem.
If your nominal wage rises more slowly than the price level, we can say your real wage has ________ and the purchasing power of a dollar has ________
A) risen; risen B) fallen; risen C) fallen; fallen D) risen; fallen
A futures contract
A. gives the owner the right, but not the obligation, to buy shares of a stock at a specified price within the time limits of the contract. B. gives the owner the right, but not the obligation, to sell shares of a stock at a specified price within the time limits of the contract. C. is a contract in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price. D. gives the owner the right, but not the obligation, to buy or sell shares of a stock at a specified price within the time limits of the contract.
What is the main difference between a temporary and permanently negative supply shock?
A) The real interest rate immediately decreases after a temporary shock while it eventually increases after a permanent shock. B) Output increases right away after a temporary shock but the impact does not last whereas for a permanent shock output permanently decreases. C) A temporary shock will see a permanent increase in inflation while inflation will only rise temporarily after a permanent shock. D) all of the above E) none of the above