What is meant by the term "rate of interest"? If the nominal rate of interest in an economy is 6%, and the rate of inflation in the economy is 4%, what is the real rate of interest in the economy?
What will be an ideal response?
The rate of interest is the additional payment a borrower has to make on a one-dollar loan typically at the end of a year.
The real rate of interest = nominal rate of interest - inflation rate → the real rate of interest = 2%.
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An increase in the price of product X causes a decrease in the quantity demanded for product X. One basic explanation for this is:
A. The law of increasing opportunity cost B. The price-elasticity effect C. The law of supply D. The law of diminishing marginal utility
If immigrant workers are complementary to native workers, then
A. native workers will be better off with open borders. B. immigrant workers will receive a higher wage than native workers. C. immigration will shift the demand for native labor to the left. D. each firm will hire only immigrants or only natives but not a mixture of the two. E. very few immigrants will find jobs.