Do people make decisions on the basis of the nominal interest rate or the real interest rate? What is the relationship between the two interest rates?
What will be an ideal response?
People make their decisions on the basis of the real interest rate since decisions are always made on the basis of relative and not absolute prices. The nominal interest rate equals the real interest rate plus the anticipated rate of inflation.
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When the government sets a price floor which is below the equilibrium price
A. a price ceiling will follow. B. a shortage will develop. C. a surplus will develop. D. the equilibrium price will be maintained.
The market labor-supply curve has all of the following properties except it:
A. is always upward sloping. B. reflects people's willingness to work more when wages are higher. C. shows the relationship between the price of labor and the quantity supplied. D. shifts with changes in the opportunity cost for work
If food is measured on the horizontal axis of a budget line diagram, and clothing is measured on the vertical axis, an increase in
a. the price of food will decrease the slope (e.g., -9 instead of -6) of the budget line b. the price of food will increase the slope of the budget line c. income will decrease the slope of the budget line d. income will increase the slope of the budget line e. the price of clothing will decrease the slope of the budget line
?Devaluation of a domestic currency:
a. is also called revaluation
b. refers to an increase in a floating exchange rate
c. refers to a decrease in a floating exchange rate
d. refers to an increase in a fixed exchange rate
e. refers to a decrease in a fixed exchange rate