Which of the following statements about real and nominal interest rates is correct?
a. When the nominal interest rate is rising, the real interest rate is necessarily rising; when the nominal interest rate is falling, the real interest rate is necessarily falling.
b. If the nominal interest rate is 4 percent and the inflation rate is 3 percent, then the real interest rate is 7 percent.
c. An increase in the real interest rate is necessarily accompanied by either an increase in the nominal interest rate, an increase in the inflation rate, or both.
d. When the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate.
d
You might also like to view...
Jennifer is a junior in college. Her current cumulative grade point average (GPA) is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7 . Which of the following statements is correct?
a. If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. b. If Jennifer earns a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7. c. Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7. d. Either b or c could be correct.
A competitive firm has been selling its output for $10 per unit and has been maximizing its profit. Then, the price rises to $14, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its
a. marginal revenue is lower than it was previously. b. marginal cost is lower than it was previously. c. quantity of output is higher than it was previously. d. All of the above are correct.
In a market system, self-interest motivates most people to
A. rely on government central planning. B. provide products for other people. C. remain self-sufficient. D. avoid paying insurance premiums.
Which is a basic proposition of supply-side economics?
A. The Federal Reserve should target the Federal funds rate rather than the money supply B. Tax-hikes on business reduce productivity and output and reduce aggregate supply C. Low marginal tax rates reduce incentives to work, saving, and investment D. Transfer payments increase incentives to work