The real interest rate is:
A. the percentage increase in money that the lender receives on a loan.
B. the percentage increase in purchasing power that the lender receives on a loan.
C. also called the after-tax interest rate.
D. usually higher than the nominal interest rate.
B. the percentage increase in purchasing power that the lender receives on a loan
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When Americans or foreigners expect the return on ________ assets to be high relative to the return on ________ assets, there is a ________ demand for dollar assets, everything else held constant
A) dollar; foreign; constant B) dollar; foreign; higher C) foreign; dollar; higher D) foreign; dollar; constant
Suppose the probability of an employee being caught shirking, q, is a function of the employer's monitoring, M, such that q = M/100
If workers must put up a $1,000 bond and the gain to each worker from shirking is $100, what is the employer's optimal level of monitoring that is just sufficient to discourage shirking?