If the rate of inflation is zero, prices are expected to remain stable, and the nominal rate of interest is 3 percent, then the
A) real rate of interest is equal to the nominal rate.
B) real rate of interest is less than the nominal rate.
C) nominal rate is greater than the real rate of interest.
D) investment demand schedule will shift upward.
Answer: A
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At a carnival roulette wheel, a player can either win $10, $30, or $80 . If it costs $35 to play, we would expect to see
a. A long line of players waiting to play b. No players for the game c. The carnival losing money per play d. Both A&C
Ceteris paribus, which of the following situations would result in the largest quantity of money demanded?
a. When nominal GDP = $1.4 trillion and the interest rate is 3 percent. b. When nominal GDP = $1.4 trillion and the interest rate is 6 percent. c. When nominal GDP = $1.2 trillion and the interest rate is 5 percent. d. When nominal GDP = $800 billion and the interest rate is 4 percent.
If a commodity’s price is above its marginal cost, the market will tend to produce too much of the good.
Answer the following statement true (T) or false (F)
Situation 33-1 Suppose that the equation that represents the expected benefits of burglary for a given prospective criminal is as follows: EB = Ps x Loot The criminal's cost equation is as follows: EC = [Pp x (I + F)] + AC Where: EB is the expected benefits of burglary Ps is the probability of successfully burglarizing a house Loot is the dollar take from the burglary EC is the expected costs of
burglary Pp is the probability of imprisonment I is the income the criminal gives up if caught and imprisoned F is the dollar value the criminal puts on freedom AC is the anguish cost of committing a burglary Refer to Situation 33-1. If the prospective criminal sets the following values: Ps = 65 percent Loot = $20,000 Pp = 20 percent I = $30,000 F = $15,000 AC = $5,000 The prospective criminal's expected benefit from committing the burglary is ______________ and his expected cost of committing the burglary is _______________. Economic theory tells us that under these circumstances, the prospective criminal ______________ commit the burglary. A) $13,000; $14,000; will B) $13,000; $14,000; will not C) $6,667; $50,000; will not D) $57,500; $50,000; will