This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain how the real interest rate could be negative and how this situation would benefit the ... (Read 95 times)

Hungry!

  • Hero Member
  • *****
  • Posts: 1,071
on: Jun 29, 2018
Explain how the real interest rate could be negative and how this situation would benefit the borrower.
 
  What will be an ideal response?

Question 2

If the dollar appreciates against the peso it means that U.S. goods become more expensive in Mexico.
 
  Indicate whether the statement is true or false


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

elyse44

  • Sr. Member
  • ****
  • Posts: 319
Reply #1 on: Jun 29, 2018
Answer to Question 1

When people borrow money, they pay a nominal interest rate to the lender. Inflation decreases the real buying power of the payments made to repay the loan. If the inflation rate is greater than the nominal interest rate, then the real interest rate is negative. In this case, the lender actually loses by lending money to the borrower because the quantity of goods and services the lender can buy with the proceeds of the loan has actually decreased.

Answer to Question 2

TRUE


Hungry!

  • Member
  • Posts: 1,071
Reply 2 on: Jun 29, 2018
Excellent

bdobbins

  • Member
  • Posts: 326
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Did you know?

The shortest mature adult human of whom there is independent evidence was Gul Mohammed in India. In 1990, he was measured in New Delhi and stood 22.5 inches tall.

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

Primary production is positively correlated with the evapotranspiration rate. Primary production is positively correlated with the evapotranspiration rate.
Situation in a Guy's Life Situation in a Guy's Life
A nurse adjusts the rate of a client’s IV. A nurse adjusts the rate of a client’s IV.
Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four
Real Femur Real Femur
A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August ... A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August ...
Video: Mechanisms of capillary exchange (transcytosis & bulk flow)

For a complete list of videos, visit our video library