The real rate of interest will approximately be equal to
A. the nominal interest rate plus the expected rate of inflation.
B. the nominal interest rate minus the expected rate of change in the price level.
C. the stated rate of interest in a high-inflation economy.
D. the stated rate minus the opportunity cost of capital.
Answer: B
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According to the Rule of 70, if a country grows at 2.0 percent per year instead of 1.5 percent per year, how many fewer years will it take to double its level of real GDP?
A) It will take 11.6 years fewer. B) It will take 35 years fewer. C) It will take 58.3 years fewer. D) It will take 20 years fewer. E) It will take 17.9 years fewer.
The Federal Reserve econometric model estimates that a 1 percent increase in government spending, with the money supply held constant, will
A) increase real GDP by 1 percent per year for two years. B) increase real GDP by 2 percent per year for two years. C) decrease real GDP by 1 percent per year for two years. D) have no effect on real GDP.
Adverse selection in insurance requires that
a. all people face the same risk b. potential customers facing more risk are no more interested in purchasing insurance c. people are risk averse d. insurers can tell higher risk people from lower risk people
A natural monopoly occurs when a single firm can produce the entire output of the market at a lower average cost than could many firms
a. True b. False Indicate whether the statement is true or false