What is the relationship between real and nominal interest rates?
a. They are both different names for the same thing.
b. The real interest rate is the rate stated on a loan.
c. Real interest rate is calculated by subtracting inflation from nominal interest rate.
d. Nominal interest rate is calculated by subtracting inflation from real interest rate.
c. Real interest rate is calculated by subtracting inflation from nominal interest rate.
You might also like to view...
The Coase theorem states that if transaction costs are low, the number of parties is small, and property rights are well established
A) the government must intervene to eliminate any externalities in the market. B) private transactions are efficient. C) there will be no pollution. D) Both answers B and C are correct.
Suppose that the economy is currently at full employment. All other things being equal, if the government implements restrictive policies then the appropriate monetary policy is
a. no change from the current policy. b. reduce the growth of the money supply. c. constant growth of the money supply. d. increase the growth of the money supply.
The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that
a. worker preferences are an important source of earning differentials. b. economics ranks one set of worker preferences as more desirable than another. c. some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task. d. skill levels of laborers are a minor consideration in wage rate determination.
The real value of any variable is its nominal value:
A. adjusted for inflation. B. holding the base constant. C. holding the basket constant. D. adjusting for income.