The Real Risk-Free Rate Is Affected by Two Factors

question 48

Multiple Choice

The real risk-free rate is affected by two factors:

• A) The relative ease or tightness in capital markets and the expected rate of inflation.
• B) The expected rate of inflation and the set of investment opportunities available in the economy.
• C) The relative ease or tightness in capital markets and the set of investment opportunities available in the economy.
• D) Time preference for income consumption and the relative ease or tightness in capital markets.
• E) Time preference for income consumption and the set of investment opportunities available in the economy.

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Definitions:

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers.

Total Revenues

The sum of money a company earns from selling goods or providing services in a specific timeframe.

Demand Schedule

A table that lists the quantities of a good a consumer will buy at different prices.

Total Revenues

The complete sum of money earned from selling goods or services, prior to deducting any costs.