f inflation is higher than anticipated, benefit(s) and if inflation is lower than anticipated, benefit(s). O A. both debtors and creditors; no one O B. no one; both debtors and creditors O C. creditors; debtors O D. debtors; creditors If the interest rate on a loan is 4 percent and the actual inflation rate is 6 percent, the real interest rate is 10 percent. O A. True O B. False

f inflation is higher than anticipated, benefit(s) and if inflation is lower than anticipated, benefit(s). O A. both debtors and creditors; no one O B. no one; both debtors and creditors O C. creditors; debtors O D. debtors; creditors If the interest rate on a loan is 4 percent and the actual inflation rate is 6 percent, the real interest rate is 10 percent. O A. True O B. False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 3 In Germany, banks are paying a positive interest rate on peoples' savings, as a result O a. Savers are worse off if the inflation rate in Germany is zero O b. Savers are better off if the inflation rate in Germany exceeds the nominal interest rate Oc. Savers are worse off if the deflation rate in Germany is zero O d. Savers are better off if the deflation rate in Germany is zero
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Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal interest rate? nominal interest rate: = I All else equal, if inflation decreases by 0%, what will happen to the nominal interest rate? o The real interest rate will decrease by 0%. o The nominal interest rate will decrease by 0 %. o The nominal interest rate will increase by 0%. o The real interest rate will increase by 0%. 1 What do economists call the relationship between the nominal interest rate and the inflation rate? o shoeleather costs Leontief paradox 86 • Taylor rule Fisher equation
Assuming inflation is negative (deflation), then the nominal interest rate a) must always be smaller than the real interest rate. b) could be larger or smaller than the nominal interest rate, depending on the rate of inflation. c) would normally be larger than the nominal interest rate. O d) increases exactly as fast as inflation. O e) must always be larger than the real interest rate.
If the nominal interest rate is a constant 15 percent and anticipated inflation falls from 10 percent to 7 percent, the real interest rate would change from Select one: O A. 8 to 5 percent. O B.7 to 9 percent. OC5 to 8 percent. O D. 15 to 10 percent.
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m 14:41 Use the table below to calculate the inflation rate. Year 1 2 3 Price of the Market Basket $1,868 $1,952 $2,065 Using Year 1 as a base year, what is the inflation rate in Year 2? W Multiple Choice O 4.20 percent 104.50 percent O 5.79 percent 4.50 percent zoom 73 82,244 A MacBook Pro N @ # $ % & 1 2 3 4 5 6 7 8
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jane wants to borrow $100 from jack. jack wants to make 5% real return on his money, so they both agree on a 5% interest rate paid next year. both dont anticipate the 3% inflation next year. in this case, a. jane will pay $8 a year from now on b. jack will receive more than 5% of real rate of return a year from now. c. jane is better off d. jack is better off
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Darshan needs to borrow money to become a nurse practitioner. Suppose that compensation of nurse practitioners is expected to increase. Assuming nothing else changes, this means that if Darshan borrows now, his cost of borrowing money is expected to due to the following factor: O Decreasing preferences for future consumption. O Rising benefits of becoming a nurse practitioner. Rising compensation of nurse practitioners provokes inflation. Which of the following events could decrease the cost of money? Check all that apply. The Federal Reserve purchases Treasury securities held by banks Inflation increases The federal deficit decreases The Federal Reserve sells Treasury securities to banks decrease increase
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