The nominal interest rate:
a. varies directly with the rate of expected inflation in an economy
b. is the interest rate expressed in dollars of constant purchasing power.
c. equals the difference between the real interest rate and the inflation rate.
d. is the basis for decisions taken by the lenders and the borrowers in an economy.
e. is the percentage increase in the average price level from one year to the next.
a
You might also like to view...
Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen?
A) The firm's revenue will increase. B) The firm will sell more output than its competitors. C) The firm's profits will increase. D) The firm will not sell any output.
An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level
Indicate whether the statement is true or false
As wealth decreases, which of the following is likely to account for a larger fraction of a saver's portfolio?
A) corporate stock B) corporate bonds C) U.S. government securities D) checking account balance
Which of the following represents a positive supply shock, a negative supply shock, a positive demand shock, or a negative demand shock?
a. The government unexpectedly doubles all personal income tax rates. b. A newly discovered infectious disease shuts down all international ports indefinitely. c. Major technological progress occurs in the market for green energy. d. An earthquake wipes out 60% of the manufacturing capacity of an economy. e. The government unexpectedly eliminates the inheritance tax and the capital gains tax on sales of stocks and bonds.