If the inflation premium is 3% and the real interest on a loan is 4%, then the nominal interest rate is

Competitive firms are able to set price above marginal cost when

A) the markup is less than the cost of going to another store. B) the markup is greater than the cost of going to another store. C) all consumers have full information. D) consumers know what other stores are charging.

If incomes fall by 5 percent and the quantity demanded for new cars falls by 10 percent,

A. New cars are an inferior good, and the income elasticity is +0.5. B. New cars are a normal good, and the income elasticity is +2.0. C. New cars are a normal good, and the income elasticity is +.5. D. New cars are an inferior good, and the income elasticity is +2.0.