If the Nominal Interest Rate Is 6

question 57

Multiple Choice

If the nominal interest rate is 6.3 percent and the inflation rate is 7.2 percent, then the real interest rate equals:

• A)- 13.5 percent.
• B)+ 13.5 percent.
• C)- 0.9 percent.
• D)-7.2 percent.
• E)+ 1.1 percent.

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to market changes.

Perfect Competitor

A theoretical market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to efficient pricing and resource allocation.

Long Run

In economics, the long run refers to a period in which all factors of production and costs are variable, allowing for adjustment to changes in market conditions.

Marginal Revenue

The extra revenue obtained by selling an additional unit of a product or service.