If the Nominal Interest Rate Is 6 Percent and the Rate

question 81

Multiple Choice

If the nominal interest rate is 6 percent and the rate of inflation is 10 percent,then the real interest rate is

• A)-16 percent.
• B)-4 percent.
• C)4 percent.
• D)16 percent.

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Definitions:

Long Run

A period in economics sufficient for all markets to adjust, including prices, outputs, and wages, reflecting changes in economic conditions or policies.

Perfect Competitor

A theoretical market scenario where many firms sell identical products, where no single buyer or seller can influence the market price.

Long Run

A period in economics where all factors of production and costs are variable, and firms can enter or exit the market.

Perfect Competitor

A theoretical market structure where numerous small firms produce identical products, allowing no single firm to affect the market price.