When an economy operates at its long-run potential output level,
a. aggregate demand will exceed aggregate supply in the goods and services market.
b. unemployment will decline to an abnormally low rate that cannot be sustained in the long run.
c. the actual rate of unemployment will exceed the natural rate of unemployment.
d. the natural and actual rates of unemployment will be equal.
D
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A movement downward along the demand for loanable funds curve occurs when
A) the expected profit from investment increases. B) business expectations become more optimistic. C) the real interest rate falls. D) the supply of loanable funds decreases.
You borrow $10,000 from a bank for one year at a nominal interest rate of 5%. If inflation over the year is 2%, what is the real interest rate you are paying?
A) 2% B) 2.5% C) 3% D) 5%