In the Long Run, the Real Interest Rate Is 3

question 241

Multiple Choice

In the long run, the real interest rate is 3 percent, real GDP grows at 4 percent, velocity is constant, and the quantity of money grows at 8 percent.The nominal interest rate is

• A) 6 percent.
• B) 7 percent.
• C) 8 percent.
• D) 10 percent.
• E) 12 percent.

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Definitions:

Rival Consumption

A situation where the consumption of a good by one individual prevents simultaneous consumption by other individuals.

Excludable

A characteristic of a good or service where it's possible to prevent individuals who have not paid for it from having access.

Television Signal

The electronic waves transmitted from a broadcast station that carry audio and visual information to televisions.

Nonrival Consumption

A characteristic of goods where one person's consumption does not reduce availability or enjoyment of the good for others.