You are given the following information about the economy: the nominal interest rate = 8 percent, and the real rate of interest = 6 percent. The inflation premium is
A. 2 percent.
B. 6 percent.
C. 8 percent.
D. 14 percent.
Ans: A. 2 percent.
You might also like to view...
Suppose two companies, Macrosoft and Apricot, and considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars). 
If Macrosoft and Apricot make their decision at the same time, then which of the following statements is correct?
A. The game has more than one Nash equilibrium. B. The game does not have a Nash equilibrium. C. The only Nash equilibrium is that both develop a touch-screen t-shirt. D. The only Nash equilibrium is that neither develops a touch-screen t-shirt.
If a consumer's fixed income increases, his opportunity cost also increases.
Answer the following statement true (T) or false (F)
The goal of the firm is
A) low labor turnover. B) to maximize sales. C) to minimize costs. D) profit maximization.
Which statement represents most correctly the relationship between nominal GDP and real GDP?
a. Nominal GDP measures base-year production using base-year prices, whereas real GDP measures current production using current prices. b. Nominal GDP measures current production using base-year prices, whereas real GDP measures current production using current prices. c. Nominal GDP measures current production using current prices, whereas real GDP measures current production using base-year prices. d. Nominal GDP measures current production using current prices, whereas real GDP measures base-year production using base-year prices.