The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent. What is the real interest rate?
a. 5.25 percent
b. 5 percent
c. 2.3 percent
d. 2 percent
d
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A natural monopoly is likely to arise when:
a. the government restricts entry through licensing b. patents provide protection of intellectual property. c. economies of scale exist over the relevant range of demand. d. a firm controls a crucial input to production.
What is one of the traditional political uses of tariffs?
a. protection of borders b. protection of vested economic interests c. protection of military secrets d. protection of exchange rates
Suppose that income tax revenues are maximized at an average (income) tax rate of 45 percent. If the Laffer curve is a correct diagrammatic representation of the relationship between tax rates and tax revenue, it follows that a tax rate of
A) 35 percent will reduce tax revenues. B) 48 percent will reduce tax revenues. C) 48 percent will generate as much tax revenue as a tax rate of 45 percent. D) 35 percent will generate as much tax revenue as a tax rate of 45 percent. E) a and b
People on a fixed income are adversely affected by inflation.
a. true b. false