If an Increase in Expected Inflation Equally Raises the Nominal

question 117

Multiple Choice

If an increase in expected inflation equally raises the nominal interest rate,the expected real interest rate ________ and thus investment demand ________.

• A)rises,increases
• B)rises,decreases
• C)is unchanged,is unchanged
• D)falls,increases
• E)falls,decreases

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Definitions:

Monopoly Firm

A business that is the sole provider of a good or service in a market, facing no competition, which can lead to higher prices and inefficiencies.

Barrier to Entry

Factors or conditions that prevent new competitors from easily entering an industry or area of business.

Red Beryl

A rare mineral that is red in color and is composed of beryllium, aluminum, and silicate.

Monopoly Power

The ability of a single seller in a market to control the prices of goods or services, usually due to lack of competition.