Which of the Following Statements Is False

question 56

Multiple Choice

Which of the following statements is false?

• A)Interest would not exist in a barter (moneyless) economy because there is no money in a barter economy.
• B)The real interest rate is equal to the nominal interest rate minus the expected inflation rate.
• C)The source of monopoly profits is often high barriers to entry.
• D)The nominal interest rate will equal the real interest rate only when the expected inflation rate is zero.

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Definitions:

Real Cost of Borrowing

The total expense of taking out a loan, including interest payments and any additional fees, adjusted for inflation.

Wealth Redistribution

The transfer of income, wealth, or property among individuals or groups, often implemented through policies by governments to improve economic equality.

Quantity Equation

An equation that relates the quantity of money in an economy to the nominal value of economic output, often used in monetary theory to predict inflation.

Money Supply

The total capital resources in monetary terms within an economy at a certain time.