Why can't the nominal interest rate be negative?
What will be an ideal response?
Investors can always hold cash. Since cash carries a zero nominal interest rate, no investor would willingly hold a bond (which carries some risk) that pays a negative interest rate when he/she could carry cash, which pays a zero interest rate.
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Education
A) does not really add to one's human capital. B) does not really affect one's income. C) is a major factor affecting one's income. D) explains all the differences in male-female incomes.
You have just read that the Federal Reserve has increased the money supply to avoid a recession. For a given price level, you would expect the LM curve to
A) shift up and to the left as the real money supply falls. B) shift up and to the left as the real money supply rises. C) shift down and to the right as the real money supply falls. D) shift down and to the right as the real money supply rises.
The best example of a perfectly competitive market would be the market for:
A. grain. B. shoes. C. computers. D. cameras.
Diversification
A) maximizes risk. B) maximizes profit. C) minimizes risk. D) minimizes costs.