If the nominal interest rate is 5 percent and inflation is 3 percent, the real interest rate is:
A. 8 percent.
B. 0 percent.
C. 2 percent.
D. 15 percent.
Answer: C
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A country is most likely to have a comparative advantage in the production of cars if:
A. it has a relative abundance in the natural resources needed to produce cars. B. it imports most of the raw materials necessary to produce cars. C. its citizens prefer driving cars to other forms of transportation. D. it has strict environmental protection laws governing automobile emissions.
The Federal Open Market Committee
A) meets weekly to set Fed policy. B) has 7 voting members. C) always includes the president of the Federal Reserve Bank of New York as a member. D) does not include any members of the Board of Governors.
A fundamental axiom of rational choice theory is
A. consumers should be risk-neutral. B. consumers should disregard recent performance data. C. choices should be independent of irrelevant alternatives. D. choices should be independent of relevant alternatives.
This monopolistic competitor is in the
A. short run making a profit.
B. short run taking a loss.
C. long run making a profit.
D. long run taking a loss.