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Author Question: If the nominal interest rate is 0 and the real interest rate is 2, what is the inflation rate? A) ... (Read 40 times)

xclash

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on: Jun 30, 2018
If the nominal interest rate is 0 and the real interest rate is 2, what is the inflation rate?
 
  A) -2 B) 2 C) -4 D) 0

Question 2

Why is money as a medium of exchange important in an economy?
 
  What will be an ideal response?


Ksh22

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Reply #1 on: Jun 30, 2018
Answer to Question 1

A

Answer to Question 2

Money permits more specialization and reduces the transaction costs associated with means-of-payment uncertainty. Under barter, one might be uncertain as to what the other party might be willing to accept. With money, this uncertainty is greatly reduced.


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