If expected inflation is constant and the nominal interest rate increases by 3.5 percentage points, then the real interest rate
a. increases by 3.5 percentage points.
b. increases, but by less than 3.5 percentage points.
c. decreases, but by less than 3.5 percentage points.
d. decreases by 3.5 percentage points.
Ans: a. increases by 3.5 percentage points.
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If Mia can either wash 10 cars or wax 2 cars during a day, and Daniel can either wash 17 cars or wax 2 cars during a day, then according to the law of comparative advantage,
a. Daniel's opportunity cost of waxing a car is less than Mia's. b. their total output can be expanded if Mia specializes in waxing and Daniel in washing. c. their total output can be expanded if Mia specializes in washing and Daniel in waxing. d. it would be impossible for Daniel and Mia to increase their total output through specialization and mutual exchange.
The quantity of loanable funds supplied by firms is
A. independent of the interest rate. B. negatively related to the rate of return. C. inversely related to the interest rate. D. positively related to the interest rate.
A relationship between two variables in which one variable increases at the same time as the other decreases is called
A) nonlinear. B) constant. C) negative. D) direct.
Payments made to shareholders of a corporation are called
A. dividends. B. corporate bonds. C. retained earnings. D. common stock.