If the Nominal Interest Rate Is 11 Percent and the Inflation

question 108

Multiple Choice

If the nominal interest rate is 11 percent and the inflation rate is 9 percent, then the real interest rate is approximately

• A)2 percent.
• B)20 percent.
• C)4 percent.
• D)18 percent.
• E)-2 percent.

---

Definitions:

Entry Barriers

Entry Barriers are obstacles that make it difficult for new entrants to enter an industry, protecting existing firms from competition.

Oligopoly

An oligopoly is a market structure dominated by a few large firms, leading to limited competition and possibly collaborative behavior to control prices and market share.

Increasing Returns To Scale

Long-run average total cost declines as output increases (also referred to as economies of scale).

Barriers To Entry

Obstacles that make it difficult for new competitors to enter a market, such as high start-up costs or strict regulations.