The real rate of interest is
A) equal to the nominal rate of interest less the anticipated rate of inflation.
B) equal to the nominal rate of interest plus the anticipated rate of inflation.
C) found by taking the nominal rate of interest and dividing it by the actual rate of inflation.
D) found by taking the nominal rate of interest and adding the actual rate of inflation.
Answer: A
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A hotel with market power charges customers who check in before 5:00 pm more than those who check in after 5:00 pm. Those who check in early are much more likely to use the hotel's pool
Explain why this price difference may not be price discrimination.
Which is NOT a necessary condition for price discrimination to exist?
A) The firm must face a downward sloping demand curve. B) The firm must identify buyers with different elasticities of demand. C) The firm must be able to prevent resale of the product or service. D) The firm must establish different prices to reflect marginal cost.