Do people make decisions on the basis of the nominal interest rate or the real interest rate? What is the relationship between the two interest rates?
What will be an ideal response?
People make their decisions on the basis of the real interest rate since decisions are always made on the basis of relative and not absolute prices. The nominal interest rate equals the real interest rate plus the anticipated rate of inflation.
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The demand for insulin is quite inelastic. The demand for Pepsi is quite elastic. Suppose the elasticity of supply for insulin is the same as the elasticity of supply for Pepsi
If a $0.20 tax was imposed on each of these goods (holding everything else constant), which consumers would pay more of the tax? A) the Pepsi consumers B) the insulin consumers C) There would be no difference in the amount of tax paid by the consumers. D) More information is needed to determine which consumers pay more of the tax. E) The premise of the question is wrong because the elasticity of demand and the incidence of a tax are not related.
The required reserves of a bank equal its ________ the required reserve ratio
A) loans divided by B) deposits divided by C) deposits multiplied by D) loans multiplied by