Suppose the nominal interest rate is 10 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 4 percent. At the end of the year, you have earned a real rate of interest of:
A. 14 percent.
B. 4 percent.
C. 10 percent.
D. 6 percent.
Answer: D
You might also like to view...
A rent ceiling set above the equilibrium rent
A) decreases the quantity demanded but not the quantity supplied. B) decreases the quantity supplied but not the quantity demanded. C) decreases both the quantity demanded and the quantity supplied. D) has no effect on the market outcome.
If there is an excess demand for money, individuals ________ bonds, causing interest rates to ________
A) sell; rise B) sell; fall C) buy; rise D) buy; fall
In connection with laborers, the law of conspiracy meant that
(a) employers had every right to organize or conspire to keep wages low and prices high. (b) workers had every right to organize or conspire to keep wages high and working hours short. (c) workers could organize unions to promote their own interests as long as they did it publicly and in fair dealings with employers and did not "conspire" to do it in secret meetings not open to the public. (d) worker organizations aimed at promoting the economic interests of the members were illegal.
$500 and there are two companies he could invest X dollars in: Dog Gone Salon, which has a payoff of 2X with 50% probability and $0 with 50% probability and Pretty Kitty Grooming, which has a payoff of 4X with 25% probability and $0 with 75% probability. Dean's expected payoff from investing $250 in both Dog Gone Salon and Pretty Kitty Grooming is:
A. $62.50. B. $500. C. $750. D. $250.