Nominal Interest Rates Are Higher Than Real Interest Rates as Long

question 52

Multiple Choice

Nominal interest rates are higher than real interest rates as long as

• A)expected inflation is positive.
• B)the government taxes interest income.
• C)inflation is expected to decline in the future.
• D)long-term interest rates are higher than short-term interest rates.

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Definitions:

Human Wants

The desires and needs of individuals or society that drive demand for products, services, and resources.

Opportunity Cost

The forgone benefit that would have been derived by an option not chosen.

Iraq

A country located in Western Asia, known for its rich history and as a significant oil producer.

Full Production

The level of production at which an economy or firm operates at maximum capacity, utilizing all available resources efficiently without waste.