For each of the following years, determine the real interest rate. Find the difference between this rate and the desired real interest rate and explain how any difference affects borrowers and lenders. Write out percentage rates as whole numbers e.g. 5%. a. In year 1, the nominal interest rate is 7%, the inflation premium on loans is 2%, and actual rate of inflation is 3%. The real interest rate is %, the desired real interest is [ b. In year 2, the nominal interest rate is 8 %, the inflation premium The real interest rate is %, the desired real interest is c. In year 3, the nominal interest rate is 6%, the inflation premium The real interest rate is%, the desired real interest is %, borrowers are [(Click to select) and lenders are [(Click to select) is 3%, and the actual rate of inflation is 1%. %, borrowers are [(Click to select) and lenders are [(Click to select) inflation is 1%, and the actual rate of 1%, borrowers are (Click to select) is 1%. and lenders are [(Click to select)
For each of the following years, determine the real interest rate. Find the difference between this rate and the desired real interest rate and explain how any difference affects borrowers and lenders. Write out percentage rates as whole numbers e.g. 5%. a. In year 1, the nominal interest rate is 7%, the inflation premium on loans is 2%, and actual rate of inflation is 3%. The real interest rate is %, the desired real interest is [ b. In year 2, the nominal interest rate is 8 %, the inflation premium The real interest rate is %, the desired real interest is c. In year 3, the nominal interest rate is 6%, the inflation premium The real interest rate is%, the desired real interest is %, borrowers are [(Click to select) and lenders are [(Click to select) is 3%, and the actual rate of inflation is 1%. %, borrowers are [(Click to select) and lenders are [(Click to select) inflation is 1%, and the actual rate of 1%, borrowers are (Click to select) is 1%. and lenders are [(Click to select)
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 13P
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Question
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For each of the following years, determine the real interest rate. Find the difference between this rate and the desired real interest rate
and explain how any difference affects borrowers and lenders. Write out percentage rates as whole numbers e.g. 5%.
a. In year 1, the nominal interest rate is 7%, the inflation premium on loans is 2%, and actual rate of inflation is 3%.
The real interest rate is [
%, the desired real interest is
b. In year 2, the nominal interest rate is 8%, the inflation premium
The real interest rate is%, the desired real interest is
%, borrowers are [(Click to select) and lenders are [(Click to select)
is 3%, and the actual rate of inflation is 1%.
]%, borrowers are [(Click to select) and lenders are [(Click to select)
is 1%.
c. In year 3, the nominal interest rate is 6%, the inflation premium is 1%, and the actual rate of inflation
The real interest rate is %, the desired real interest is
%, borrowers are (Click to select) and lenders are (Click to select)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F56d3a37b-e2c8-454f-897f-6fd76f53a599%2Ffbb708ea-64d3-4d08-98af-efff435a1f13%2Fo2nq56k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ces
For each of the following years, determine the real interest rate. Find the difference between this rate and the desired real interest rate
and explain how any difference affects borrowers and lenders. Write out percentage rates as whole numbers e.g. 5%.
a. In year 1, the nominal interest rate is 7%, the inflation premium on loans is 2%, and actual rate of inflation is 3%.
The real interest rate is [
%, the desired real interest is
b. In year 2, the nominal interest rate is 8%, the inflation premium
The real interest rate is%, the desired real interest is
%, borrowers are [(Click to select) and lenders are [(Click to select)
is 3%, and the actual rate of inflation is 1%.
]%, borrowers are [(Click to select) and lenders are [(Click to select)
is 1%.
c. In year 3, the nominal interest rate is 6%, the inflation premium is 1%, and the actual rate of inflation
The real interest rate is %, the desired real interest is
%, borrowers are (Click to select) and lenders are (Click to select)
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