Which of the following statements is correct?
a. If the inflation rate is steady at 5 percent, for example, the real and nominal interest rates will be equal.
b. An increase in the demand for goods now compared with goods in the future would cause the real interest rate to rise.
c. A "positive rate of time preference" means that an individual would rather save than consume.
d. During an extended inflationary period, the money (or nominal) interest rate will usually be lower than the real rate of interest.
B
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An economic model suggests that an additional year of education increases a student's future wages by 15 percent. Using this model, answer the following questions: a) Gary completes 8 years of education, and John completes 9 years of education
If Gary earns $20 per hour, how much is John expected to earn? b) John completes 9 years of education, and Kevin completes 12 years of education. Given John's earnings [as calculated in a)], how much is Kevin expected to earn? c) Is there any limitation to such a model? Explain your answer.
Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear
A) along Tomaso's production possibilities frontier. B) inside Tomaso's production possibilities frontier. C) outside Tomaso's production possibilities frontier. D) at the horizontal intercept of Tomaso's production possibilities frontier.
Purchases of inventories by
A) firms are not counted in investment spending. B) firms are also counted in investment spending. C) households are also counted in investment spending. D) households and Firms are also counted in investment spending. E) foreign consumers are counter in investment spending.
Economic magnitudes measured at the prices actually paid are referred to as ________ magnitudes
A) "real" B) "actual" C) "nominal" D) "unadjusted" E) "gross"