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 145 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?

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?

Green tea is able to stop the scent of garlic or onion from causing bad breath.

Did you know?

During the twentieth century, a variant of the metric system was used in Russia and France in which the base unit of mass was the tonne. Instead of kilograms, this system used millitonnes (mt).

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

Did you know?

The training of an anesthesiologist typically requires four years of college, 4 years of medical school, 1 year of internship, and 3 years of residency.

Rate of Residential Change, Past Year, in the United States Rate of Residential Change, Past Year, in the United States
Example of Index entry with Main Term and indented subterms. Example of Index entry with Main Term and indented subterms.
Static Stability & Environmental Lapse Rate Static Stability & Environmental Lapse Rate
How to calculate simple interest (Part 4; P = I/rt) How to calculate simple interest (Part 4; P = I/rt)
How to solve rate problems leading to fractional equations (Question 3) How to solve rate problems leading to fractional equations (Question 3)
Sonja is paid $42.50 per hour as a veterinarian. She is paid 1 times the regular rate for all ... Sonja is paid $42.50 per hour as a veterinarian. She is paid 1 times the regular rate for all ...
Video: Splitting of Sugar, Oxidation/ Reduction & ATP Generation

For a complete list of videos, visit our video library