If the expected real interest rate 5% and expected inflation 3%, the nominal interest rate in year t is approximately
A) 2%.
B) 3%.
C) 5%.
D) 8%.
E) 11%.
D
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If the price of insulin is currently above the market-clearing level, then
A) there is a shortage of insulin. B) the market for insulin is fully coordinated. C) there is a surplus of insulin. D) insulin is no longer a scarce good.
The price elasticity of demand for oil is estimated at 0.05. This value means a 10 percent increase in the
A) quantity of oil demanded will result from a 0.5 percent increase in the price of oil. B) quantity of oil demanded will result from a 0.5 percent decrease in the price of oil. C) price of oil will increase the quantity of oil demanded by 0.5 percent. D) price of oil will decrease the quantity of oil demanded by 0.5 percent.
When a negative externality exists,
A. external costs are necessarily greater than private costs. B. social costs equal private costs. C. social costs are less than private costs. D. social costs are greater than private costs. E. none of the above
An appropriate government policy toward negative externalities is to
a. subsidize the activity that creates the negative externality. b. impose a tax or fine on the activity that creates the negative externality. c. pay money to the party that creates the negative externality. d. impose a tax on recipients of the negative externality.