The inflation rate has been 7 percent for 10 years, and the nominal interest rate has been 6 percent during this same time period. Suddenly, the public anticipates that the inflation rate will be 6 percent this coming year. The real rate of interest for the coming year is
A. 0 percent.
B. 13 percent.
C. 2 percent.
D. 4 percent.
Answer: A
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Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large. Each individuals demand curve will shift ________, and the market demand curve for the product will shift ________
A) to the right; to the right B) to the right; to the left C) to the left; to the left D) to the left; to the right
Demand for one item goes down when the price of another item goes down. These items must be
A. complements. B. inferior goods. C. normal goods. D. substitutes.
Two variables are said to be negatively correlated if their values
A. tend to move in opposite directions. B. only decrease but never increase. C. tend to move in the same direction. D. are always negative.
Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is ________ so supply is ________.
A. 3/2; inelastic B. 2/3; elastic C. 2/3; inelastic D. 3/2; elastic