Author Question: If the nominal rate of interest is 10.5 percent, and the inflation rate is 4.3 percent, what is the ... (Read 135 times)

audragclark · **on:** Jun 30, 2018

If the nominal rate of interest is 10.5 percent, and the inflation rate is 4.3 percent, what is the real rate of interest?
a. 3.0 percent
b. 4.3 percent
c. 6.2 percent
d. 10.5 percent

Question 2

Given a fixed nominal interest rate on a loan, unanticipated deflation:
a. decreases the burden of paying off the loan.
b. increases the burden of paying off the loan.
c. does not alter the burden of paying off the loan.
d. has an indeterminate effect on the burden of paying off the loan.