If the Nominal Interest Rate Is 6 Percent and the Rate

question 178

Multiple Choice

If the nominal interest rate is 6 percent and the rate of inflation is 9 percent,then the real interest rate is

• A) -3 percent.
• B) -0.33 percent.
• C) 3 percent.
• D) 15 percent.

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Definitions:

Short-Run Capacity

Refers to the maximum output a firm can produce under a given set of fixed and variable inputs within a short period.

Average Variable Cost

Average variable cost is the total variable cost divided by the quantity of output, showing the cost of producing one more unit of a good.

Marginal Product

The additional output produced by using one more unit of a given input, holding all other inputs constant.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good changes as the production volume varies.