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Optimizing economic agents use the roal interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0 45% at a time when infiefion is around 0 9% For the average saver, the real rate of interest on his or her savings is % (Round your response to two decimal places and use a minus sign if necessary.) Il banks expect that the rate of inflation in the coming yoar will be 3.9% and they want a real retum of 8% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places) I1 tho cconomy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is O A. croditors (people or institutions that are owed money) OB. debtors (poople or businesses who owo money). OC. both would bonofit cqually. OD. neither bencfits

Optimizing economic agents use the roal interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0 45% at a time when infiefion is around 0 9% For the average saver, the real rate of interest on his or her savings is % (Round your response to two decimal places and use a minus sign if necessary.) Il banks expect that the rate of inflation in the coming yoar will be 3.9% and they want a real retum of 8% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places) I1 tho cconomy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is O A. croditors (people or institutions that are owed money) OB. debtors (poople or businesses who owo money). OC. both would bonofit cqually. OD. neither bencfits

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.45% at a time when infialion is around 0 9% For the average saver, the real rate of interest on his or her savings is % (Round your response to two decimal places and use a minus sign if necessay.) Il banks expect that the rate of inflation in the coming year will be 3.9% and they want a real return of 8% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places) 11 the economy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is O A. creditors (people or institutions that are owed money). O B. deblors (pcople or businesses who owe moncy). OC. both would benefit cgqually O D. neilher bencfits.
Transcribed Image Text:Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.45% at a time when infialion is around 0 9% For the average saver, the real rate of interest on his or her savings is % (Round your response to two decimal places and use a minus sign if necessay.) Il banks expect that the rate of inflation in the coming year will be 3.9% and they want a real return of 8% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places) 11 the economy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is O A. creditors (people or institutions that are owed money). O B. deblors (pcople or businesses who owe moncy). OC. both would benefit cgqually O D. neilher bencfits.
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