Question 50 15 pts [50] The annual growth rate of the price of a market basket or a price index is called the nominal interest
Question 50 15 pts [50] The annual growth rate of the price of a market basket or a price index is called the nominal interest rate. real interest rate. inflation rate. expectation rate. Question 51 15 pts [51] Disinflation occurs when the price level falls over time. the inflation rate is negative. O the inflation rate decreases over time. O Both a and b. Question 52 15 pts [52] The prediction that a borrower will be happy if the ex post real interest rate is lower than the ex ante real interest rate is based on the assumption that the borrower's income will grow at least as fast as the inflation rate. the borrower is a firm, not a household or a government agency. the actual inflation rate will be lower than the rate the borrower expected. O the borrower has borrowed by issuing an indexed bond. Question 53 15 pts [53] The farm crisis during the 1980s was caused, in large part, by the fact that O lenders were asking high nominal interest rates for farm loans. the average annual growth rate of farm production was low. the ex post real interest rate on farm loans was lower than the ex ante real rate. the inflation rate fell unexpectedly. Question 54 15 pts [54] An article in yesterday's Wall Street Journal reported that the inflation rate over the next few years is likely to be 1 percent lower than the rate the market expected previously. Based on historical evidence, if you turn to the interest rate tables that appear inside today's Journal, then you are likely to find that the market interest rates on newly-issued bonds are they were yesterday. exactly 1 percent higher than O a bit less than 1 percent higher than O exactly 1 percent lower than O a bit less than 1 percent lower than Question 55 15 pts [55] Adjustable-rate mortgages were U.S. mortgage lenders' response to fear of sharp increases in inflation. widespread defaults on home mortgages. competition from foreign lenders. nationalization of mortgage lending
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