When economists refer to the "real" interest rate, they mean
A) the nominal interest rate adjusted for tax rates.
B) the nominal interest rate adjusted for inflation.
C) the nominal interest rate adjusted for income changes.
D) the nominal interest rate adjusted for changes in exchange rate.
Answer: B) the nominal interest rate adjusted for inflation.
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The assumption that given the strategy chosen by the other participant, a player will always choose the strategy that brings him or her the best payoff is called
A) strategic interaction. B) economic self interest. C) the rationality assumption. D) the profit-maximizing assumption.
The population of Tiny Town is 100 people and the labor force is made up of 75 people. If 5 of these people are unemployed, the unemployment rate is
A) 5/100 × 100. B) 5/80 × 100. C) 5/75 × 100. D) There is not enough information provided to calculate the unemployment rate.
The two-country, multi-product model differs from the two-country, two-product model in that, in the former
A) the relative wage ratio will determine the pattern of trade ( which good is exported by which country. B) which country will export which product is determined entirely by labor productivity data. C) full specialization is likely to hold in equilibrium. D) none of the goods are potentially nontraded. E) domestic relative prices are not relevant.
If a consumer purchases only two goods (X and Y ) and the demand for X is elastic, then a rise in the price of X
a. will cause total spending on good Y to rise. b. will cause total spending on good Y to fall. c. will cause total spending on good Y to remain unchanged. d. will have an indeterminate effect on total spending on good Y.