Author Question: Say that initially the nominal interest rate is 6 and prices are stable, but the inflation rate the ... (Read 292 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?

Human kidneys will clean about 1 million gallons of blood in an average lifetime.

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Did you know?

Increased intake of vitamin D has been shown to reduce fractures up to 25% in older people.

Did you know?

The U.S. Pharmacopeia Medication Errors Reporting Program states that approximately 50% of all medication errors involve insulin.

Did you know?

After 5 years of being diagnosed with rheumatoid arthritis, one every three patients will no longer be able to work.

For a complete list of videos, visit our video library