If the Nominal Interest Rate Was 12 Percent and the Inflation

question 173

Multiple Choice

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

• A)real rates were higher in 2001.
• B)real rates were higher in 1980.
• C)credit was more expensive in 1980.
• D)credit was cheaper in 2001 because the nominal rate was lower.

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Definitions:

Collusively

Acting in a coordinated manner, often secretly, between firms to set prices or market conditions, usually to the detriment of competition.

Oligopolistic Firms

Companies that operate in a market structure characterized by a small number of firms dominating the market, leading to limited competition.

Pure Monopoly

A market structure where a single supplier dominates the market, offering a unique product with no close substitutes.

Cartels

Organizations of producers or suppliers who collaborate to control production, pricing, and marketing of a product to maximize collective profits.