Assuming everything else constant, what effect will each of the following have on the long-term real interest rate?
a. The expected inflation rate decreases.
b. The default-risk premium increases.
c. Investors expect future short-term interest rates to fall.
a. Assuming the short-term nominal interest rate does not change, the long-term real interest rate will decrease.
b. The long-term real interest rate will increase.
c. The long-term real interest rate will decrease.
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An externality can be a
A) cost or a benefit. B) benefit but not a cost. C) cost but not a benefit. D) marginal cost but not a total cost.
A market with more than one seller and significant barriers to entry is called
a. perfect competition b. monopolistic competition c. an oligopoly d. collusive e. regulated
Discuss the effects on the current price of a stock from each of the following:a) An increase in the growth rate of the dividend;b) A decrease in the risk-free interest rate;c) An increase in the equity-risk premium; and finallyd) A decrease in the annual dividend.
What will be an ideal response?