The real rate of interest is
A. negative if the anticipated rate of inflation is zero.
B. the market rate of interest expressed in today's dollars.
C. the nominal rate of interest minus the anticipated rate of inflation.
D. the nominal rate of interest divided by the anticipated rate of inflation.
Answer: C
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The classical economists assumed that
A) wages and prices were inflexible, especially downward. B) government intervention in the economic system was necessary and helpful. C) monopoly was widespread in the economy. D) wages and prices were flexible.
The budget deficit is defined as
A) T + (G + TR), and this is negative. B) T - (G + TR), and this is positive. C) T - (G + TR), and this is negative. D) T + (G - TR), and this is negative.
In the market for loanable funds, the equilibrium interest rate is determined by the intersection of:
a. the downward-sloping supply curve for loanable funds and the upward-sloping demand curve for loanable funds. b. the upward-sloping supply curve for loanable funds and the downward-sloping demand curve for loanable funds. c. the downward-sloping supply curve of loanable funds and the horizontal demand curve for loanable funds. d. the downward-sloping supply curve of loanable funds and the vertical demand curve for loanable funds. e. the upward-sloping supply curve for loanable funds and the horizontal demand curve for loanable funds.
An indifference curve is a line showing
a. combinations of goods that can be produced if all resources are fully employed. b. all combinations of two commodities that are equally desirable to the consumer. c. all combinations of goods over which the consumer has no choice. d. how decisions are made in a nonmarket economy.