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Practice Questions
Real Interest Rate Practice Questions
1. Suppose the nominal interest rate on a loan is 13% and inflation is 3%. What is the real interest rate?
*
a. 16%
b. 10%
c. 4.3%
d. 13%
2. A bank wants a 13% real return on a loan that will be paid back in a year. The bank expects inflation to be 5% during that year. What nominal interest rate should the bank charge?
*
a. 18%
b. 8%
c. 2.6%
d. 13%
3. Unexpectedly, inflation ends up being only 2% during the year mentioned in Question #2. Assuming the bank charged the correct nominal interest rate, what will be the real interest rate on the loan?
*
a. 10%
b. 11%
c. 15%
d. 16%
4. When inflation is lower than expected, this ______________.
*
a. Redistributes wealth from the lender to the borrower
b. Redistributes wealth from the borrower to the lender
c. Diminishes the impact of the interest
d. Increases the nominal return on investment
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Dictionary of Economics
Course
(113 videos)
A
Absolute Advantage
Adverse Selection
Aggregate Demand
Aggregate Supply (Long Run)
Arbitrage
Practice Questions
Asymmetric Information
Austrian Business Cycle Theory
B
Banks
Bond Market
Budget Constraints
Business Fluctuations
Bundling
C
Capital Goods
Club Goods
Common Resource
Practice Questions
Coase Theorem
Compensating Differentials
Comparative Advantage
Consumer Surplus
Practice Questions
Conditional Convergence
Practice Questions
Crowding Out
Practice Questions
Cyclical Unemployment
D
Deadweight Loss
Practice Questions
Demand Curve
Discouraged Worker
Practice Questions
Division of Labor
E
Economic Growth
Efficient Market Hypothesis
Practice Questions
Elasticity of Demand
Elasticity of Supply
Equation of Exchange
Equilibrium (Price)
Externalities
F
Factor Income Approach
Practice Questions
Federal Funds Rate
Practice Questions
Financial Intermediaries
Practice Questions
Fiscal Multiplier
Fiscal Policy
Fisher Effect
Practice Questions
Free Rider Problem
Practice Questions
Frictional Unemployment
G
Great Depression
Great Recession
Gross Domestic Product
H
Human Capital
I
Incentives
Practice Questions
Indifference Curves
Inferior Goods
Practice Questions
Inflation
Institutions
Practice Questions
K
Keynesian Business Cycle Theory
L
Labor Force Participation
Leverage Ratio
Practice Questions
Life Cycle Theory of Savings
Practice Questions
Linear Regression
Loanable Funds Market
M
Marginal Product of Labor
Marginal Utility
Minimum Wage
Monetarist Business Cycle Theory
Monetary Offset
Practice Questions
Monetary Policy
Money
Money Multiplier
Monopoly
Mutual Funds
Practice Questions
N
National Spending Approach
Practice Questions
Natural Rate of Unemployment
Practice Questions
Nominal GDP
Normal Goods
Practice Questions
Nudges
O
Omitted Variable Bias
Practice Questions
Open Market Operations
Practice Questions
Opportunity Cost
Practice Questions
Outliers
P
Patents
Pigouvian Tax
Prediction Markets
Price Ceilings
Price Discrimination
Price Floors
Principal-Agent Problem
Practice Questions
Private Goods
Practice Questions
Producer Surplus
Practice Questions
Profit Maximization
Public Goods
Q
Quantity Theory of Money
R
Real Business Theory
Real GDP
Real GDP Per Capita
Real Interest Rate
Practice Questions
Real Shocks
Practice Questions
Rent Control
Ricardian Equivalence
Practice Questions
The Rule of 70
Practice Questions
S
Shadow Banks
Practice Questions
Signaling
Solow Model
Speculation
Stagflation
Practice Questions
Steady State
Sticky Wages
Structural Unemployment
Stock Market
Subsidies
Supply Curve
T
TANSTAAFL
Practice Questions
Tariffs
Taxes
Tragedy of the Commons
Tying
U
Unemployment
V
Velocity of Money
