Which of the Following Statements Is Correct About the Relationship

question 107

Multiple Choice

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

• A)The real interest rate is the nominal interest rate times the rate of inflation.
• B)The real interest rate is the nominal interest rate minus the rate of inflation.
• C)The real interest rate is the nominal interest rate plus the rate of inflation.
• D)The real interest rate is the nominal interest rate divided by the rate of inflation.

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Definitions:

Fixed Cost

Costs that do not change with the level of output or sales, such as rent or salaries.

Variable Cost

Expenses that change in proportion to the amount of goods or services produced, like labor and materials.

Diseconomies of Scale

occur when a company or production process becomes less efficient as it scales up, leading to increased average costs per unit.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-term average cost, allowing it to be competitively viable.