201-210

The nominal interest rate equals the:

real interest rate plus the rate of inflation.

Unanticipated inflation:

reduces the value of money.

Refer to the accompanying figure on the labor market. The level of employment at the equilibrium wage rate is:

$100,000

Refer to the accompanying figure on the labor market. The equilibrium wage rate is:

$15

Refer to the accompanying figure on the labor market. The unemployment rate at the equilibrium wage rate is:

0%

Refer to the accompanying figure on the labor market. The size of the labor force at equilibrium wage rate is:

100,000.

Suppose that the nominal rate of interest is 7% and the inflation rate is 3%. The real rate of interest is equal to:

4%.

Which of the following is true?

Unexpected inflation benefits borrowers and hurts lenders.

Menu costs of inflation are the:

costs associated with businesses changing prices.

Menu costs refer to the increased cost:

of changing listed prices.