Real Interest Rates _______ and Nominal Interest Rates _______

question 78

Multiple Choice

Real interest rates _______ and nominal interest rates _______.

• A) can be positive or negative; must be positive
• B) can be positive or negative; can be positive or negative
• C) must be positive; can be positive or negative
• D) must be positive; must be positive

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Definitions:

Lerner Index

A measure of a firm's market power and pricing strategy, defined as the difference between price and marginal cost, scaled by price.

Elastic

Describes a situation where the quantity demanded or supplied of a good or service changes significantly in response to price changes.

Inelastic Demand

Describes a situation where the demand for a product does not change significantly in response to a change in the product's price.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, such as high startup costs, strict regulations, or strong brand loyalty.