A rapid, unexpected increase in the inflation rate could make real interest rates negative

Which of the following is true of investment spending in the U.S. economy?

a. Investment spending in 2009 was higher than in 2006. b. Investment spending was almost double of household spending. c. Businesses had reduced expenditures on capital goods in 2008 and 2009. d. Investment spending exhibited a more or less steady increase between 1959 and 2009. e. Investment spending fluctuated relatively less than consumption.

Assume that Sharon purchases $5,000 worth of a stock. To do so she uses $1,000 of her own money and borrows the remaining $4,000 at a 7.0% interest rate. If the stock's value decreases by 10% in one year and she has to sell the stock at that time, what is her rate of return?

a. ?10% b. ?50% c. ?78% d. ?156%