To Convert the Nominal Interest Rate to the Real Interest

question 217

Multiple Choice

To convert the nominal interest rate to the real interest rate,we

• A)divide the nominal interest rate by the inflation rate.
• B)multiply the nominal interest rate by the inflation rate.
• C)subtract the inflation rate from the nominal interest rate.
• D)add the inflation rate to the nominal interest rate.
• E)subtract the nominal interest rate from the inflation rate and then multiply by 100.

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Definitions:

Deadweight Loss

An economic inefficiency arising when there's a failure to attain the free market equilibrium for any product or service.

Monopolist

A market participant that is the sole seller of a product or service, having significant control over its price.

AC

Average Cost; the total cost of production divided by the number of units produced, indicating the cost per unit.

Producer Surplus

The difference between the amount producers are willing to supply goods for and the actual amount received by them when sold.