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

Author Question: What is meant by the term rate of interest? If the nominal rate of interest in an economy is 6, and ... (Read 101 times)

Alygatorr01285

  • Hero Member
  • *****
  • Posts: 564
on: Jun 30, 2018
What is meant by the term rate of interest? If the nominal rate of interest in an economy is 6, and the rate of inflation in the economy is 4, what is the real rate of interest in the economy?
 
  What will be an ideal response?

Question 2

Which of the following is likely to happen if the quantity of bank reserves held at the Fed increases?
 
  A) The stock of money in the economy increases. B) The number of loans issued by banks decrease.
  C) Bank deposits decrease. D) The real interest rate increases.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

essyface1

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Jun 30, 2018
Answer to Question 1

The rate of interest is the additional payment a borrower has to make on a one-dollar loan typically at the end of a year.
The real rate of interest = nominal rate of interest - inflation rate  the real rate of interest = 2.

Answer to Question 2

A


Alygatorr01285

  • Hero Member
  • *****
  • Posts: 564
Reply #2 on: Jun 30, 2018
Thank you :)


essyface1

  • Sr. Member
  • ****
  • Posts: 347
Reply #3 on: Jun 30, 2018
Happy to help you


« previous next »
 

Did you know?

The most destructive flu epidemic of all times in recorded history occurred in 1918, with approximately 20 million deaths worldwide.

Did you know?

Asthma-like symptoms were first recorded about 3,500 years ago in Egypt. The first manuscript specifically written about asthma was in the year 1190, describing a condition characterized by sudden breathlessness. The treatments listed in this manuscript include chicken soup, herbs, and sexual abstinence.

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?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Critical care patients are twice as likely to receive the wrong medication. Of these errors, 20% are life-threatening, and 42% require additional life-sustaining treatments.

Changes in metabolic rate of selected structures in a mammal's body during different activities Changes in metabolic rate of selected structures in a mammal's body during different activities
THE RATE OF PHOTOSYNTHESIS THE RATE OF PHOTOSYNTHESIS
Fluidization - Reaction Rate Chart Fluidization - Reaction Rate Chart
The rate of facilitated diffusion The rate of facilitated diffusion
Growing Interest in Sugar-Free Foods and Beverages Growing Interest in Sugar-Free Foods and Beverages
No payments were made on a $2,598 loan during its three-year term. What was the annually ... No payments were made on a $2,598 loan during its three-year term. What was the annually ...
Video: Automated external defibrillator (AED)

For a complete list of videos, visit our video library