If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate must be ?

Related Mcqs:

1. For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

   A. the United States to Switzerland causing the dollar to depreciate
   B. the United States to Switzerland causing the dollar to appreciate
   C. Switzerland to the United States causing the franc to depreciate
   D. Switzerland to the United States causing the franc to appreciate

2. For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?

   A. The United States to Japan causing the dollar to depreciate
   B. The United States to Japan causing the dollar to appreciate
   C. The Japan to United States, causing the dollar to depreciate
   D. The Japan to United States, causing the dollar to appreciate

3. If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is ?

   A. 4 percent
   B. 10 percent
   C. -4 percent
   D. 3 percent
   E. 21 percent

4. Suppose that the nominal tariff rate on finished computers is 12 percent and that the weighted average of the nominal tariff rates on the inputs used in producing computers is 18 percent. Thus, the effective rate of protection for the computer industry must ?

   A. be less than 12 percent and can be negative
   B. be less than 12 percent but must be greater than zero
   C. equal 6 percent
   D. exceed 30 percent

5. Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

   A. H
   B. c
   C. d
   D. F

6. Refer to Exhibit 6.If People in the economy expect inflation to be 3 percent and inflation is 3 percent the economy is operating at point ?

   A. b
   B. I
   C. a
   D. H

7. If borrowers and lenders agree on a nominal interest rate and inflation turns out to be less than they had expected ?

   A. neither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract
   B. None of these answers
   C. borrowers will gain at the expense of lenders
   D. lenders will gain at the expense of borrowers

8. Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

   A. appreciate by 8 percent against the yen
   B. depreciate by 8 percent against the yen
   C. remain at its existing exchange rate
   None of the above

9. If in Pakistan real GDP/person in 2004 is Rs18,073 and real GDP/person is 2005 is Rs18,635 What is the growth rate of real output per person over this period ?

   A. 3.1 percent
   B. 3.0 percent
   C. 18.6 percent
   D. 18.0 percent

10. Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners ?

    A. U.S exports tend to rise, and imports tend to fall
    B. U.S imports tend to rise, and exports tend to fall
    C. U.S foreign exchange reserves tend to rise
    D. U.S foreign exchange reserves remain constant