The real interest rate is the: Select one: a. market interest rate. b. annual percentage increase...
The real interest rate is the:
Select one:
a. market interest rate.
b. annual percentage increase in the nominal value of a financial asset.
c. annual percentage increase in the purchasing power of a financial asset.
d. the interest rate charged on a loan in dollar terms.
The Cost-Benefit Principle:
Select one:
a. fully captures how people choose between alternatives.
b. provides an abstract model of how people should choose between alternatives.
c. describes how people behave once they have enough education.
d. provides little insight into how people actually chose between alternatives.
Homework Answers
Ans.
1) C . annual percentage increase in the purchasing power of a financial asset.
Real interest rate is annual percentage increase in the purchasing power of a financial asset. It is calculated by Nominal Intereste rate minus Inflation.
2) B. Provides an abstract model of how people should choose between alternatives.
The cost benefit principle gives an abstract model about how people should choose between alternatives . The principle indicates that action should be taken only if its benefits exceed the cost.
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