Subtracting the Inflation Rate from the Nominal Rate of Interest

question 109

Multiple Choice

Subtracting the inflation rate from the nominal rate of interest tells you the:

• A) nominal rate of return.
• B) real interest rate.
• C) real rate of inflation.
• D) price level of the economy.

---

Definitions:

Economies of Scale

The financial advantages achieved by companies through their operational size, with unit costs usually dropping as the scale of production increases.

Average-Fixed-Cost Curve

A graphical representation showing how the fixed cost per unit changes with changes in the volume of production.

AVC Curve

The Average Variable Cost (AVC) curve represents how the per-unit variable cost of production changes as the quantity of output changes.

ATC Curve

The average total cost curve, which plots the per-unit total cost of producing goods at different levels of output.