The real rate of interest is
A. found by taking the nominal rate of interest and adding the actual rate of inflation.
B. equal to the nominal rate of interest plus the anticipated rate of inflation.
C. found by taking the nominal rate of interest and dividing it by the actual rate of inflation.
D. equal to the nominal rate of interest less the anticipated rate of inflation.
Answer: D
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If the real interest rate is less than the equilibrium real interest rate, there is a ________ of loanable funds, and ________
A) shortage; savers increase their saving supply to restore the equilibrium B) shortage; borrowers have an easy time finding the funds they want C) surplus; some borrowers cannot find the funds they want D) shortage; some borrowers cannot find the funds they want E) surplus; borrowers have an easy time finding the funds they want
The substitution effect of a price increase causes a decrease in the quantity of an inferior good demanded
Indicate whether the statement is true or false
All of the following are steps involved in basic currency swaps EXCEPT
A) counterparties exchange the net interest at the end of the swap. B) the parties exchange principals in two currencies. C) the parties exchange periodic interest payments over the life of the agreement. D) the parties exchange the principal amount at the end of the agreement.
In equilibrium, the price of a transferable emissions permit
A) is constrained to the amount the government first charged for it. B) equals the marginal cost of abatement for all firms. C) equals the marginal cost of abatement for the firm with the highest cost, and exceeds the marginal cost of abatement of other firms. D) equals the marginal cost of abatement for the firm with the lowest cost, and is less than the marginal cost of abatement of other firms. E) equals the marginal social cost of emissions.