Author Question: If the nominal interest rate equals 10 percent and the inflation rate equals 6 percent, what does ... (Read 43 times)

WWatsford · **on:** Jun 29, 2018

If the nominal interest rate equals 10 percent and the inflation rate equals 6 percent, what does the real interest rate equal?

What will be an ideal response?

Question 2

Refer to the scenario above. If the curator values the painting at 45,000, which of the following problems is likely to arise?

A) Adverse selection
B) Free-rider problem
C) The paradox of thrift
D) The tragedy of the commons

adf223 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The real interest rate equals the nominal interest rate minus the inflation rate, or in this case, 10 percent minus 6 percent, which equals 4 percent.

Answer to Question 2

A