The Gold Standard was in place from 1880 to 1914. Answer the following questions using the model developed in class. Suppose nominal interest rates are 5 percent for all countries on the gold standard. You should assume that the world supply of gold increases by 4 percent. Income for countries on the gold standard increases by two percent. What are real interest rates for countries on the gold standard. a) Real interest rates are 2 percent b) Real interest rates are a negative 1 percent. c) We do not have enough information to answer this question. d) Real interest rates are zero. e) Real interest rates are 3 percent.

The Gold Standard was in place from 1880 to 1914. Answer the following questions using the model developed in class. Suppose nominal interest rates are 5 percent for all countries on the gold standard. You should assume that the world supply of gold increases by 4 percent. Income for countries on the gold standard increases by two percent. What are real interest rates for countries on the gold standard. a) Real interest rates are 2 percent b) Real interest rates are a negative 1 percent. c) We do not have enough information to answer this question. d) Real interest rates are zero. e) Real interest rates are 3 percent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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