The nominal rate of interest is 4% and the anticipated rate of inflation is 5%. What is the real rate of interest?
A. 9%
B. -1%
C. 4%
D. 1%
Answer: B
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In the expanded circular flow diagram, the government supplies
A) factors of production to the factor market. B) goods and services to households. C) factors of production to firms. D) goods and services to the product market.
Governments are also affected by inflation. In which of the following ways is the government affected by inflation?
a. Expected inflation increases the real interest rate paid by the government on its new bond issues (i.e., deficit financing). b. Inflation increases nominal income tax revenues received by the government. c. Inflation automatically decreases government spending. d. All of the above are true. In other words, the government is affected by each one of them.
Which of the following statements is correct concerning the burden of a tax imposed on take-out food?
A.We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination. B. Sellers bear the entire burden of the tax. C. Buyers bear the entire burden of the tax. D. Buyers and sellers share the burden of the tax.
A $5 tax levied on the buyers of pants will cause the
a. supply curve for pants to shift down by $5. b. supply curve for pants to shift up by $5. c. demand curve for pants to shift down by $5. d. demand curve for pants to shift up by $5.