Explain why high nominal interest rates in an economy does not necessarily mean real interest rates in the same economy are also high
What will be an ideal response?
Real interest rates have been adjusted for inflation and are calculated as nominal interest rates minus the inflation rate. The higher the inflation rate, the lower the real rate of interest, so high nominal interest rates do not always mean high real interest rates. For example, if the nominal interest rate is 12 percent, and the inflation rate is 9 percent, the real interest rate is only 3 percent.
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As long as it does not shut down, a perfectly competitive firm earns the maximum profit as long as it operates so that
A) its price exceeds its average total cost. B) market demand is inelastic. C) its price exceeds its marginal revenue. D) its marginal revenue equals its marginal cost.
Which of the following statements is the MOST accurate? In general, under the monetary approach to the exchange rate
A) the interest rate is not independent of the money supply growth rate in the short run. B) the interest rate is independent of the money supply growth rate in the long run. C) the interest rate is not independent of the money supply growth rate in the long run, but independent in the short run. D) the interest rate is not independent of the money supply growth rate in the long run. E) the interest rate is a factor of the money supply growth rate only in the short term.
In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in
A) tastes and preferences. B) military capabilities. C) the size of their economies. D) relative abundance of factors of production. E) labor productivities.
The total costs of regulation
A) include increased taxes and increased prices of the products being regulated. B) are paid entirely by the regulated industries. C) are much higher than just the explicit government outlays to fund the administration of various regulations. D) are paid entirely by the consumers of regulated industries.