The nominal interest rate is 7 percent and the expected inflation rate is 4 percent. The real interest rate is:
A) 10 percent.
B) -2 percent.
C) 3 percent.
D) 4 percent.
C
You might also like to view...
If the price of aluminum used to make bicycles increases, the price of a bicycle rises because of a
A) rightward shift of the demand curve for bicycles. B) rightward shift of the supply curve of bicycles. C) leftward shift of the demand curve for bicycles. D) leftward shift of the supply curve of bicycles.
Make use of a T-account to show the effect of the Fed's purchase of $5 billion worth of foreign government securities on the Fed's balance sheet (note: assume the Fed writes a check to purchase the securities)
What will be an ideal response?
Which is greater, gross domestic product or national income? By how much?
a. Gross domestic product < National income; indirect business taxes, depreciation, and income earned by foreigners in the United States b. Gross domestic product < National income; net exports and indirect business taxes c. Gross domestic product > National income; net exports and indirect business taxes d. Gross domestic product > National income; indirect business taxes, depreciation, and income earned by foreigners in the United States
The labor supply curve is typically upward sloping because as the wage rate rises,
a. it will exceed the reservation wages of more individuals b. the opportunity cost of leisure falls c. the demand for the good produced by labor increases d. the marginal revenue product of labor falls e. the marginal revenue product of labor rises