If the nominal interest rate is 2 percent and the anticipated inflation rate is 6 percent, then
A. the real interest rate is -8 percent.
B. the real interest rate is -4 percent.
C. the real interest rate is 8 percent.
D. the real interest rate is 4 percent.
Answer: B
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The immediate effect of a bank's purchase of U.S. government securities from the Fed is a(n): a. decrease in the bank's assets
b. increase in the bank's assets. c. decrease in the Fed's assets. d. increase in the Fed's assets. e. decrease in both the bank's and the Fed's assets.
In the events of the housing bubble collapsing, once the housing prices stopped increasing refinancing:
A. was no longer an option, and a wave of foreclosures occurred. B. no longer allowed people to borrow cash on the new value of their home, and spending slowed. C. became less popular, and people's consumption overall dropped. D. became more popular, and people's consumption accelerated overall.