Suppose that the nominal rate of interest is holding steady at 2 percent even as the anticipated rate of inflation rises. What is happening to the real rate of interest?
A. It equals the nominal interest rate.
B. It is increasing.
C. It is unchanged.
D. It is decreasing.
Answer: D
You might also like to view...
If the U.S. dollar becomes weaker in international foreign exchange markets, imported goods become more expensive. One result of this is that
A) domestic employment rises. B) net exports increase. C) real Gross Domestic Product (GDP) increases. D) net exports decrease.
When the Fed uses contractionary policy,
A) it causes inflation. B) the price level rises higher than it would if the Fed did not pursue policy. C) it does not change the price level. D) the price level rises less than it would if the Fed did not pursue policy.
If minimum wage legislation does cause unemployment, then:
A. those who are lucky enough to land jobs benefit. B. those who become unemployed as a result lose. C. firms will not bear the entire burden of the higher cost of employment. D. All of these are true.
In the prisoners' dilemma game, self-interest leads
a. each prisoner to confess. b. to a breakdown of any agreement that the prisoners might have made before being questioned. c. to an outcome that is not particularly good for either prisoner. d. All of the above are correct.