How is inflation related to interest rates?
What will be an ideal response?
People base their decisions on borrowing, lending, and investing on the basis of the real interest rate. If there is anticipated inflation, the nominal rate of interest will equal the real rate of interest plus the anticipated inflation rate. So, interest rates vary directly with anticipated inflation. Unanticipated inflation leads to a real interest rate different from what people thought, and the decisions people made turn out to be mistaken.
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Which characteristic is associated with monopolistic competition?
A) collusion B) product differentiation C) small number of firms D) awareness of rival firms in the market
The effect of trade on specialized employees of import-competing industries will be ________ jobs and ________ pay because they are relatively ________
A) fewer; lower; immobile B) fewer; lower; mobile C) more; lower; immobile D) more; higher; mobile E) more; higher; immobile