If the Nominal Interest Rate Is Rises

question 24

Multiple Choice

If the nominal interest rate is rises,

• A) there is substantial inflation in the economy.
• B) real interest rates are declining.
• C) the opportunity cost of holding cash rises..
• D) consumers and firms are less inclined to use credit cards.
• E) inflation is declining.

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Definitions:

Wage

The fixed regular payment, typically calculated on an hourly, daily, or piecework basis, given by an employer to an employee.

Union Contracts

Agreements between labor unions and employers detailing wages, working conditions, and rights for union members.

Nonunion Workers

Employees who are not members of a labor union and do not have their employment terms negotiated collectively.

Union Density

The ratio of workers who are union members to the total number of workers in a given region or sector, indicative of the strength and reach of labor unions.