Real interest rates at times have been negative. Why would anyone lending money agree to a negative real interest rate?
What will be an ideal response?
The lender did not agree to a negative real interest rate, instead unanticipated inflation occurred. If the actual inflation rate exceeds the anticipated inflation rate, the actual real interest rate received by lenders and paid by borrowers can end up negative.
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Which of the following contributes to increasing marginal returns?
A) decreasing implicit costs B) increasing explicit costs C) specialization of labor D) Both answers A and B are correct. E) Both answers A and C are correct.
Inflation is generally the result of total spending growing faster than total production
Indicate whether the statement is true or false
In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T ) - 300rIP = 200 - 400rG = 200NX = 10T = 150 Given the information about the economy above, what would be the impact on induced expenditures of a one-percentage-point increase in the real interest rate?
A. Induced expenditures would decrease by 35 units. B. Induced expenditures would decrease by 7 units. C. Induced expenditures would not change. D. Induced expenditures would increase by 35 units.
A change in aggregate supply would be caused by a change in:
A. the price level. B. aggregate demand. C. the quantity of real output supplied. D. input prices.