If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is
a. -5 percent.
b. 1.67 percent.
c. 5 percent.
d. 11 percent.
c
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A banker motivated by profit maximization may make decisions that destabilize the banking system
a. True b. False Indicate whether the statement is true or false
In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then
a. the government has a budget surplus and investment is 1,000 b. the government has a budget surplus and investment is 2,000 c. the government has a budget deficit and investment is 1,000 d. the government has a budget deficit and investment is 2,000
Farming in poor countries is considered to be ___________ intensive because __________.
A. labor; labor is typically relatively cheaper than machinery in poor countries B. capital; the labor used is concentrated, spread thinly across a lot of capital C. labor; the tools in poor countries are more plentiful than the people D. capital; the tools in poor countries are relatively cheaper than the cost of using people in poor countries
According to behavioral economics, cognitive biases:
A. create errors in decision making, but these errors are random and follow no particular pattern. B. occur but are not prevalent enough to distort the behavioral predictions of neoclassical economics. C. are misunderstandings or misperceptions that cause systematic error. D. are solely the result of faulty heuristics.