Explain why the interest rate is the opportunity cost of holding currency. What is the benefit of holding currency?
The nominal interest rate on currency is zero. The next best alternative is to buy a bond and earn interest. Currency is used as a medium of exchange. Bonds are illiquid and so are costly to convert to a medium of exchange.
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In which of the following periods did nations of the European Union experience the lowest average annual rate of growth of per capita real Gross Domestic Product (GDP)?
A. 1981-1990 B. 1991-2000 C. 2001-2010 D. 2011-2017
The new term introduced in the extended IS-LM model is
A) risk premium. B) nominal interest rate. C) taxes. D) G.
In the above figure, over the price range P1P2, demand is
A. perfectly elastic. B. inelastic. C. unit elastic. D. elastic.
Real gross domestic product
A. Is a measure of inflation B. Will increase if there is an increase in the price level C. Will increase if there is an increase in the level of output D. Can change from one year to the next even if there is no change in output