ECON 2030 EXAM 4 QUESTIONS
AND 100% CORRECT ANSWERS!!
In which of the following situations would the real interest rate be the lowest?
The nominal interest rate is 1 percent and the expected inflation rate is 0 percent.
The nominal interest rate is 3 percent and the expected inflation rate is 1 percent.
The nominal interest rate is 7 percent and the expected inflation rate is 7 percent.
The nominal interest rate is 12 percent and the expected inflation rate is 8 percent.
The nominal interest rate is 20 percent and the expected inflation rate is 17 percent.
C
In which of the following situations would the nominal interest rate be the highest?
The real interest rate is -2 percent and the expected inflation rate is 7 percent.
The real interest rate is -1 percent and the expected inflation rate is 5 percent.
The real interest rate is 0 percent and the expected inflation rate is 3 percent.
The real interest rate is 1 percent and the expected inflation rate is 1 percent.
The real interest rate is 2 percent and the expected inflation rate is 4 percent.
C
In which of the following situations would it be MOST advantageous to be lending?
The nominal interest rate is 0 percent and the expected inflation rate is 3 percent.
The nominal interest rate is 1 percent and the expected inflation rate is 2 percent.
The nominal interest rate is 3 percent and the expected inflation rate is -1 percent.
The nominal interest rate is 8 percent and the expected inflation rate is 5 percent.
The nominal interest rate is 10 percent and the expected inflation rate is 10 percent.
C
If nominal income has increased by 4 percent and the aggregate price level has
decreased by 3 percent, then real income has _____ by _____ percent, everything else
held constant. increased; 1
decreased; 1
, increased; 7
decreased; 7
increased; 12
decreased; 12
C
Suppose the CPI equaled 100 in 2011 and 110 in 2016 and a typical household's nominal
income equaled $40,000 in 2011 and $45,000 in 2016. Between 2011 and 2016 the
aggregate price level _____ and real household income _____, everything else held
constant. increased; increased
increased; decreased
decreased; increased
decreased; decreased
A
The Fisher effect is the tendency for _____ interest rates to be _____ when the inflation rate
is low.
nominal; high
nominal; low
real; high
real; low
B
The inflation rate is a _____ variable; the civilian labor force is a _____ variable.
stock; stock
stock; flow
flow; stock
flow; flow
C
y = C + I + G + (X - IM)
Name All the variables in the Equation
AND 100% CORRECT ANSWERS!!
In which of the following situations would the real interest rate be the lowest?
The nominal interest rate is 1 percent and the expected inflation rate is 0 percent.
The nominal interest rate is 3 percent and the expected inflation rate is 1 percent.
The nominal interest rate is 7 percent and the expected inflation rate is 7 percent.
The nominal interest rate is 12 percent and the expected inflation rate is 8 percent.
The nominal interest rate is 20 percent and the expected inflation rate is 17 percent.
C
In which of the following situations would the nominal interest rate be the highest?
The real interest rate is -2 percent and the expected inflation rate is 7 percent.
The real interest rate is -1 percent and the expected inflation rate is 5 percent.
The real interest rate is 0 percent and the expected inflation rate is 3 percent.
The real interest rate is 1 percent and the expected inflation rate is 1 percent.
The real interest rate is 2 percent and the expected inflation rate is 4 percent.
C
In which of the following situations would it be MOST advantageous to be lending?
The nominal interest rate is 0 percent and the expected inflation rate is 3 percent.
The nominal interest rate is 1 percent and the expected inflation rate is 2 percent.
The nominal interest rate is 3 percent and the expected inflation rate is -1 percent.
The nominal interest rate is 8 percent and the expected inflation rate is 5 percent.
The nominal interest rate is 10 percent and the expected inflation rate is 10 percent.
C
If nominal income has increased by 4 percent and the aggregate price level has
decreased by 3 percent, then real income has _____ by _____ percent, everything else
held constant. increased; 1
decreased; 1
, increased; 7
decreased; 7
increased; 12
decreased; 12
C
Suppose the CPI equaled 100 in 2011 and 110 in 2016 and a typical household's nominal
income equaled $40,000 in 2011 and $45,000 in 2016. Between 2011 and 2016 the
aggregate price level _____ and real household income _____, everything else held
constant. increased; increased
increased; decreased
decreased; increased
decreased; decreased
A
The Fisher effect is the tendency for _____ interest rates to be _____ when the inflation rate
is low.
nominal; high
nominal; low
real; high
real; low
B
The inflation rate is a _____ variable; the civilian labor force is a _____ variable.
stock; stock
stock; flow
flow; stock
flow; flow
C
y = C + I + G + (X - IM)
Name All the variables in the Equation
