Consider someone who borrows $10,000 to buy a car at a fixed interest rate of 4.5%. If inflation is 3% at the time the loan is made, then the loan must be repaid at a real interest rate of ______. But if inflation rises to ______, then the real interest rate on the loan is zero.

Which of the following exemplifies an opportunistic behavior by a franchisor arising out of incompleteness or ambiguity in a contract?

a. Providing inferior service in an attempt to cut operating costs. b. Terminating a well-operated franchisee and converting the establishment into a profitable company-owned outlet. c. Fixing exorbitant prices for products having relatively elastic demand. d. Terminating a franchisee who had been using the company brand name to endorse products that the agreement says it cannot.

If consumption changes because of a change in a factor other than the price level, then the

A) economy moves from one point on an AD curve to another point on the same curve. B) AD curve shifts. C) economy moves from one point on a short-run aggregate supply (SRAS) curve to another point on the same curve. D) SRAS curve shifts. E) none of the above