If the Rate of Inflation Is Zero, Prices Are Expected

question 387

Multiple Choice

If the rate of inflation is zero, prices are expected to remain stable, and the nominal rate of interest is 3 percent, then the

• A) real rate of interest is equal to the nominal rate.
• B) real rate of interest is less than the nominal rate.
• C) nominal rate is greater than the real rate of interest.
• D) investment demand schedule will shift upward.

Distinguish between different forms of cognitive biases and their specific manifestations.

Understand the concept of in-group versus out-group dynamics and identify biases associated with these perceptions.

Differentiate between individualism and collectivism and their impacts on social behavior and attributions.

Describe the self-serving bias and its demonstration through experimental research.

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Definitions:

Price Floor

A government-imposed minimum price below which a certain good or service cannot be sold, often set to protect producers or sectors.

Lobby

The act of attempting to influence the decisions of government officials, typically by special interest groups.

Binding Price Ceiling

A maximum price set by the government below the equilibrium price, preventing suppliers from raising the price above it, leading to shortages.

Surplus

The situation in which the quantity of a good supplied exceeds the quantity demanded, often resulting in downward pressure on prices.