Walter puts money in a savings account at his bank earning 3.5 percent. One year later he takes his money out and notes that while his money was earning interest, prices rose 1.5 percent. Walter earned a nominal interest rate of
a. 3.5 percent and a real interest rate of 5 percent.
b. 3.5 percent and a real interest rate of 2 percent.
c. 5 percent and a real interest rate of 3.5 percent
d. 5 percent and a real interest rate of 2 percent
b
Economics
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If the cross elasticity of demand between car insurance and new cars is -0.41, then car insurance and new cars are
A) complements. B) substitutes. C) normal goods. D) inferior goods. E) unrelated goods.
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The key to reaching a Pareto optimum through mutually beneficial exchange _____
a. is to remove barriers to international trade b. is to establish property rights for valuable resources c. is to provide start-up capital to fledgling entrepreneurs d. is to encourage people to use online auction services
Economics