We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that
a. the credit risk associated with Bond A is lower than the credit risk associated with Bond B.
b. Bond A was issued by the Apple corporation and Bond B was issued by the city of Houston.
c. Bond A has a term of 20 years and Bond B has a term of 2 years.
d. All of the above are correct.
a
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If velocity does not change and the quantity of money grows at the same rate as does real GDP, then in the long run
A) the real interest rate is less than the nominal interest rate. B) the inflation rate equals zero. C) the nominal interest rate equals zero. D) the inflation rate equals the growth rate of the quantity of money. E) the nominal interest rate is less than the real interest rate.
A monopolistic competitor exits the industry in the long run if ________
A) total revenue exceeds total cost B) total costs exceed total revenue C) marginal revenue exceeds marginal cost D) marginal revenue equals marginal cost