When borrowing money to purchase an automobile, Raul has the choice between a fixed nominal interest rate or adjustable nominal interest rate loan. Typically the adjustable rate loans start with a lower rate than the fixed rate loans. Given that, under what circumstances would Raul most likely want to borrow money at the higher fixed rate?
a. When he expects the inflation rate to rise
b. When he expects the inflation rate to decrease
c. When he expects the inflation rate to remain unchanged
d. When he expects the price level to remain stable
e. When he expects the government to act to lower the inflation rate
A
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Suppose that total expenditures for coffee reach a maximum at a price of $5 per pound. At this price, the demand for coffee is:
A. elastic. B. inelastic. C. perfectly inelastic. D. unit elastic.
A price floor set above the equilibrium price is not binding
a. True b. False Indicate whether the statement is true or false
Long-term contracts are generally preferable to:
A. short-term contracts. B. vertical integration. C. spot markets. D. None of the statements is correct.
If saving equals $200 when real disposable income equals $10,000, the break-even income is
A. greater than $10,000. B. less than $10,000. C. equal to $10,000. D. cannot be determined using the above information.