What Has Been the Average Annual Real Rate of Interest

question 46

Multiple Choice

What has been the average annual real rate of interest on Treasury bills over the past 107 years (from 1900 to 2006) ?

• A) Less than 1%
• B) Between 1% and 2%
• C) Between 2% and 3%
• D) Greater than 3%

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Definitions:

Excess Demand

A situation in which the quantity demanded of a good exceeds the quantity supplied at a given price, often leading to upward pressure on prices.

Competitive Pure Exchange Economy

An economic model where agents trade existing goods without the production of new goods, guided purely by their own self-interest to find an equilibrium.

Contract Curve

In economics, a curve that shows the efficient allocations of goods or services that benefit two parties in an exchange, assuming no externalities.

Utility Function

A mathematical representation of how different combinations of goods or services produce levels of happiness or satisfaction for an individual or entity.