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Author Question: Say that initially the nominal interest rate is 6 and prices are stable, but the inflation rate the ... (Read 130 times)

jman1234

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on: Jun 30, 2018
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

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Reply #1 on: Jun 30, 2018
Answer to Question 1

c

Answer to Question 2

c


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jman1234

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Reply #2 on: Jun 30, 2018
Correct answers!


Jayson

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Reply #3 on: Jun 30, 2018
Great! Please up vote :D


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