If the real rate of return is 5 percent, and the inflation rate is 2 percent, then the nominal interest rate must be:
A. 7 percent.
B. ?7 percent.
C. ?3 percent.
D. 3 percent.
Answer: A
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In February 2002, the euro/dollar exchange rate was 1.20, and in May 2002, the euro/dollar exchange rate was 1.10. What happened to the exchange rate during this period?
A) Euro appreciated against the dollar. B) Euro depreciated against the dollar. C) Dollar appreciated against the euro. D) Both B and C.
If the Federal Reserve wants to lower the federal funds rate, it should
A) increase reserve requirements. B) announce a lower rate. C) request a lower rate. D) purchase government securities.
Which of the following may not characterize an oligopoly?
A. A few firms. B. Many firms. C. Substantial market power. D. High barriers to entry.
The "coincidence of wants" problem associated with barter refers to the fact that:
A. for exchange to occur, each seller must have a product that some buyer wants. B. money must be used as a medium of exchange or trade will never occur. C. specialization is restricted by the size or scope of a market. D. buyers in resource markets and sellers in product markets can never engage in exchange.