If the nominal interest rate is high and rising, a possible cause is
A) increased lending activity.
B) a rising inflation rate.
C) a falling real interest rates.
D) increased government borrowing.
Answer: B) a rising inflation rate.
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Refer to Figure 28-2. The nonaccelerating inflation rate of unemployment, or NAIRU, is associated with which point rate in the figure above?
A) A B) B C) C D) all of the above
The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer), is $50 as Ed's opportunity cost of selling is $135 and Luis' valuation of the good is $185 . Suppose Ed and Luis do not speak the same language and Ed hires an interpreter who charges $2 per hour. Ed and Luis finally agree to a price of $160 . This implies:
a. Luis' valuation of the good will increase. b. Ed's opportunity cost will decline. c. economic value from the transaction will decline. d. Ed will receive to a lower benefit than Luis.