If the Inflation Rate Is Larger Than the Nominal Interest

question 89

Multiple Choice

If the inflation rate is larger than the nominal interest rate, the real interest rate is

• A) positive.
• B) negative.
• C) zero.
• D) either positive or zero.

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Definitions:

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to the price.

Internet Auction

An online platform where goods and services are sold to the highest bidder through competitive bidding processes.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in its price.

Marginal Cost

The increase in cost that arises from the production of one additional unit of a good or service.