The real interest rate is 4 percent a year. When the inflation rate is zero, the nominal interest rate is approximately ________ percent a year; and when the inflation rate is 2 percent a year, the nominal interest rate is approximately ________
percent a year. A) 0; 2
B) 4; 6
C) 6; 8
D) 6; 4
B
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In the case of perfectly inelastic demand,
a. the change in quantity demanded equals the change in price. b. the percentage change in quantity demanded equals the percentage change in price. c. infinitely-large changes in quantity demanded result from very small changes in the price. d. quantity demanded stays the same whenever price changes.
The following factors help explain the instability of investment, except:
A. Business expectations can quickly change for unpredictable reasons B. Innovations in the economy occur quite irregularly C. Profits of firms are highly variable from one period to the next D. Purchases of capital goods are usually nondiscretionary and cannot be postponed
If actual output increases are believed to be temporary, then
A) net investment will fall. B) net investment will increase. C) net investment will not change. D) the effect on net investment is unknown.
Suppose a farmer in a perfectly competitive agricultural industry rents land that is uniquely productive in the production of a certain crop. In the long run
A) the owner of the land receives economic rent while the farmer earns zero economic profit. B) the owner of the land earns zero economic profit while the farmer receives economic rent. C) both the farmer and the owner of the land receive economic rent. D) neither the farmer nor the owner of the land receive economic rent.