If the nominal interest rate is 3 percent and the inflation rate is 4 percent, then the real interest rate is
a. 7 percent.
b. -1 percent.
c. 3 percent.
d. 4 percent.
b
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The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon and Dana is allowed to buy only 8 gallons of ice cream, then her consumer surplus on the 8th gallon is
A) $1. B) $2. C) $3. D) $8.
The concave shape of the production possibilities frontier reflects
a. the law of comparative advantage b. the law of absolute advantage c. the law of increasing opportunity cost d. the simplifying assumption of scarce resources e. productive inefficiency
Other things equal, a reduction in American income should:
A. decrease the U.S. current account and lower the dollar. B. decrease the U.S. current account but raise the dollar. C. increase the U.S. current account but lower the dollar. D. increase the U.S. current account and raise the dollar.
If there are significant economies of scale in an industry, then:
A. a firm that is large may be able to produce at a lower unit cost than can a small firm. B. a firm that is large will have to charge a higher price than will a small firm. C. entry to that industry will be easy. D. firms must differentiate their products to earn economic profits.