The nominal interest rate is the:
A. annual percentage increase in the dollar value of a financial asset.
B. real rate of return on an asset.
C. annual percentage increase in the purchasing power of a financial asset.
D. the real interest rate minus the inflation rate.
Answer: A
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Income tax acts as a shock absorber because
A. it makes disposable income, and thus consumer spending, less sensitive to fluctuations in GDP. B. it makes disposable income, and thus consumer spending, more sensitive to fluctuations in GDP. C. it makes disposable income, and thus consumer spending, independent of fluctuations in GDP. D. none of these.
Which of the following is NOT true about this national income equation:
A) For the current account, CA, to improve, we may have to invest less than otherwise would be the case. B) For the current account, CA, to improve, we may have to save more to maintain the same amount of investment that includes foreign saving. C) For the current account, CA, to improve, the government may have to run budget surplus. D) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country. E) None of the above.
Susie grows corn in her backyard garden to feed her family. The corn she grows is not counted in GDP because
a. it was not produced for the marketplace b. it is an intermediate good that Susie will process further before feeding her family c. goods produced using land are not included in GDP d. the corn has low value e. it reduces the amount of corn she will buy at the store
Based on the graph showing a reduction in the growth of the money supply, as the economy moves from point D to point F, the trade-off between inflation and unemployment ______.
a. decreases slightly
b. increases slightly
c. holds steady
d. disappears