Author Question: Say that initially the nominal interest rate is 6 and prices are stable, but the inflation rate the ... (Read 362 times)

jman1234

  • Hero Member
  • *****
  • Posts: 560
Say that initially the nominal interest rate is 6 and prices are stable, but the inflation rate the following year rises to 3. If the real rate of interest is to remain unchanged, the nominal interest rate in the second year must:
 a. rise by 9 percentage points.
  b. rise by 6 percentage points.
  c. rise by 3 percentage points.
  d. remain unchanged.

Question 2

What would happen to the real interest rate if originally the nominal interest rate was 14 and the inflation rate was 10, then the nominal interest rate fell to 7 as the inflation rate fell to 4? It would go from:
 a. 24 to 11.
  b. 11 to 24.
  c. 4 to 3.
 d. 3 to 4.



Jayson

  • Sr. Member
  • ****
  • Posts: 350
Answer to Question 1

c

Answer to Question 2

c



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

Adolescents often feel clumsy during puberty because during this time of development, their hands and feet grow faster than their arms and legs do. The body is therefore out of proportion. One out of five adolescents actually experiences growing pains during this period.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

When blood is exposed to air, it clots. Heparin allows the blood to come in direct contact with air without clotting.

Did you know?

Oliver Wendell Holmes is credited with introducing the words "anesthesia" and "anesthetic" into the English language in 1846.

Did you know?

The first oral chemotherapy drug for colon cancer was approved by FDA in 2001.

For a complete list of videos, visit our video library