The the nominal interest rate, the is the quantity of money demanded. O a. more variable; smaller O b. lower; greater lower; smaller O d. None of these because the nominal interest rate does not influence the quantity of money demanded.
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- The nominal interest rate is 7 percent and the inflation rate is 2 percent. What is the real interest rate? O a. 5 percent O b.9 percent OC.-5 percent O d. 0.50 percentWhat is the difference between nominal and real interest rates? O A. The nominal interest rate is the jate you pay on a loan O B. The nominal interest rate always exceeds the real interest rate OC. The real interest rate is the nominal interest rate adjusted for inlation O D. All of the above. O E. A and C only.Which of the following describes the interest rate on an investment after calculating the impact of inflation?O NominalO RealO FinancialO Profit
- 2000 2005 2010 2015 2020 95.4 107 116.5 126.6 137 The above table shows a history of the Consumer Price Index (CPI) in Canada (2002 100). The price of a pair of shoes in 2020 was $69. What was the real price of the pair of shoes in 2020, expressed in 2005 dollars? O A. $53.89 O B. $49.73 O C. $61.43 O D. $58.58 Next pageWhich of the following statements are correct? Select one or more: O a. To find GDP at constant prices we can use the CPI to deflate GDP at current prices b. Inflation is measured by calculating the cost of a given bundle of goods. O c. The basket of goods used to calculate CPI inflation is tixed tor long periods O d. Some price indices adjust for the change in the quality of goods over time, as well as the change in prices.In which of the following situations isit most advantageous to be lending? Select one: O A The real interest rate is 2 percent and the nominal interest rate is 10 percent. O B. The nominal interest rate is 4 percent and the real interest rate is -2 percent. OC. The nominal interest rate is 1 percent and the real interest rate is 0 percent. O D. The real interest rate is 4 percent and the nominal interest rate is 7 percent.
- on The quality change bias is most likely to put The quality change bias is most likely to put_ into the CPI and so.... into the CPI and so O a. a downward bias; understate O b. a random bias; randomly overstate or understate O c. an upward bias; understate O d. a downward bias; overstate e. an upward bias; overstate Clear my choice the inflation rate.Ceteris paribus, if the real interest rate is 1 percent and the nominal interest rate is 3 percent, then what is the inflation rate? Select one: a. - 2 percent O b. 2 percent O c. -4 percent d. O d. 4 percentThe expenditures of a typical family on gas, food,and clothing in 2009 and 2010 are given in the table below. Assume quantses are constant trom 2009 to 2010. Expenditures in 2009 (in S) S60 310 80 Category Expenditures in 2010 (in S) Gas 568 Food 341 24 Clothing When the base year is 2009 the value of Consumer Price index (CPI) for year 2010 is (Round your response to wo decimal places) Incorrect: 1 Check answer Clear all
- Suppose that Shonda borrows $20,000 to purchase a car. The bank charges her a nominal interest rate of 9%. If the inflation rate decreases from 4% to 3%, which of the following is true? OA decrease in inflation decreases the real interest rate and hence decreases the real cost of borrowing. OA decrease in inflation increases the real interest rate and hence decreases the real cost of borrowing. O The nominal interest rate does not change and hence the real cost of borrowing remains the same. O A decrease in inflation increases the real interest rate and hence increases the real cost of borrowing.Economists find in a business cycle, a peak represents the end of, and a trough represents the end of Select one: a. an expansion; a recession O b. a depression; an expansion O c. a recession; an expansion O d. a trough; a peakQUESTION 2 Other things the same, when the price level rises, interest rates O a. fall, which means consumers will want to spend less on homebuilding. Ob.fall, which means consumers will want to spend more on homebuilding. O C. rise, which means consumers will want to spend more on homebuilding. Od.rise, which means consumers will want to spend less on homebuilding. QUESTION 3 Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have O a. lower than desired prices, which depresses their sales. O b. lower than desired prices, which increases their sales. O. higher than desired prices, which increases their sales. d.higher than desired prices, which depresses their sales.