Adler referred to perceptions of reality or expectations of the future as delusions. hallucinations. fictions. hypothetical constructs.

The following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increased over the last year (the demand curve shifted to the right). Households began saving a greater percentage of their income. The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply. New technological advances opened up more production opportunities for businesses. Expected inflation decreased. Does it appear that the economy has strengthened or weakened over the past year? Strengthened Weakened If the inflation rate was 2.80% and the nominal interest rate was 7.80% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average. 4.25% 5.75% 5.00% Assignment: Chapter 05 The Cost of Money (Interest Rates) The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply. New technological advances opened up more production opportunities for businesses. Expected inflation decreased. Does it appear that the economy has strengthened or weakened over the past year? Strengthened Weakened If the inflation rate was 2.80% and the nominal interest rate was 7.80% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average. 4.25% 5.75% 5.00% 6.25%