In the long run, the real interest rate is 3 percent, real GDP grows at 4 percent, velocity is constant, and the quantity of money grows at 8 percent. The nominal interest rate is
A) 7 percent. B) 12 percent. C) 10 percent. D) 8 percent. E) 6 percent.
A
You might also like to view...
Which of the following is always a violation of the antitrust law?
A) price fixing among competitors B) resale price maintenance C) tying arrangements D) predatory pricing
The concept of adverse selection helps to explain
A) why collateral is not a common feature of many debt contracts. B) why large, well-established corporations find it so difficult to borrow funds in securities markets. C) why financial markets are among the most heavily regulated sectors of the economy. D) why stocks are the most important source of external financing for businesses.
If an increase in the federal deficit stimulates an economy, _____
a. an expansionary gap exists in the economy b. the crowding in of private investment takes place c. the crowding out of private investment offsets crowding in of private investment d. the crowding out and crowding in of private investment cancels each other out e. interest rates increase significantly
When a monopolist increases the quantity that it sells, price decreases, which, all else equal, decreases total revenue; this is called the price effect
a. True b. False Indicate whether the statement is true or false