The Relationship Between the Long-Run Real Interest Rate and Potential

question 40

Multiple Choice

The relationship between the long-run real interest rate and potential output:

• A) is direct.
• B) is inverse.
• C) is constant since the long-run real interest rate is primarily determined by risk.
• D) depends on the actions of central bankers.

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Definitions:

Iranian Hostages

refers to the 52 American diplomats and citizens held hostage for 444 days after a group of Iranian students supporting the Iranian Revolution took over the U.S. Embassy in Tehran in November 1979.

Proposition 13

A landmark 1978 California ballot initiative that reduced property tax rates on homes, businesses, and farms by assessing property values at their 1975 value.

Property Taxes

Taxes on the value of real estate property, typically levied by local governments.

Californians

generally refers to the residents or people who are from California, a state located on the west coast of the United States.