A perfectly competitive firm maximizes its profit by producing the level of output so that its average total cost equals the market price

If the inflation rate is 2.5 percent and the nominal interest rate is 10 percent, then the real interest rate is

A) 2.5 percent. B) 7.5 percent. C) -2.5 percent. D) -7.5 percent. E) 12.5 percent.

The price of one currency in terms of another is the

A) price of gold. B) price of a SDR. C) foreign exchange rate. D) price of foreign stock.