As inflation increases, for any fixed nominal interest rate, the real interest rate:
A. decreases.
B. decreases by less than the increase in inflation.
C. remains the same, that's why it is real.
D. also increases.
Answer: A
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What do economists mean when they state that a good is scarce?
a. There is a shortage or insufficient supply of the good at the existing price. b. It is impossible to expand the availability of the good beyond the current amount. c. People will want to buy more of the good regardless of the price of the good. d. The amount of the good that people would like exceeds the supply freely available from nature.
When the Fed unexpectedly decreases the money supply,
a. real interest rates will tend to decline. b. the exchange rate value of the dollar will tend to appreciate. c. aggregate demand will tend to increase. d. there is generally no impact on the economy.
A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.98 per unit. The marginal revenue of the 151st unit of output is
a. -$6.98. b. -$0.02. c. $2.45. d. $6.98.
heck My Work Use the following scenario for the question below. A group of 100 people seeks out an insurance company to underwrite health insurance for its members. The expected medical spending for the group is $150,000. If an additional 10 people, who have expected medical spending of $5,000 per person on average, join the group, the new premium will be approximately:
a. $2,300. b. $1,818. c. $5,822. d. $2,090. e. $2,139.