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Chapter_14 - Macroeconomics Test Yourself Chapter14 1 The...

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Macroeconomics Test Yourself Chapter14 1. The real interest rate tells us a. how much consumption we must give up next year in order to consume more goods today. b. how many dollars we must give up next year in order to consume more goods today. c. how many dollars we must give up next year in order to have more dollars today. d. how many dollars we must give up today in order to have more dollars next year. e. how many dollars we must give up today in order to consume more goods today. 2. The nominal interest rate is 3. If the nominal interest rate in year t is 10%, and the expected inflation rate for year t is 2%, then the expected real interest rate in year t is approximately: 4. Whenever the inflation rate is positive, 5. If the nominal interest rate rises, and the expected inflation rate falls, then the real interest rate a. must rise. b. must fall. c. cannot be defined. d. will rise, but only if the rise in the nominal rate is greater than the drop in expected inflation. e. will fall, but only if the rise in the nominal rate is smaller than the drop in expected inflation.
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