Marge is lending Martin $1,000 for one year. The CPI is 1.60 at the time the loan is made. They expect it to be 1.76 in one year. If Marge and Martin agree that Marge should earn a 3 percent real return for the year, the nominal interest rate on this loan should be ________ percent.
A. 13
B. 7
C. 16
D. 3
Answer: A
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The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the
A) MPC. B) consumption function. C) MPS. D) multiplier.
Marginal revenue is equal to:
A) the change in price divided by the change in output. B) the change in quantity divided by the change in price. C) the change in P x Q due to a one unit change in output. D) price, but only if the firm is a price searcher.
Borrowing to finance the increases in government expenditures
A) reduces current private investment expenditures. B) increases interest rates. C) reduces growth in the nation's private capital stock. D) all of the above.
What best defines active policy making?
A) taking action to offset a change in economic performance B) taking action to increase long-term economic growth C) taking action to make markets more competitive so as to improve efficiency D) taking action to make markets less competitive so as to improve equity