Someone with dollar bills to lend will never agree to make a loan with a nominal interest rate of less than zero because:The lender would not get any dollars back from the borrowerThe lender is better off keeping the dollars than to agree to such a loanO It is mathematically impossible for the interest rate to be negativeIt would not be fair to lend money under such conditionsSuppose that inflation is expected to be at -3% per year for the foreseeable future.If the nominal interest rate is 0% per year, then the real interest rate isper year.

Nominal interest rate refers to the rate of interest before considering the inflation. A nominal…

Someone with dollar bills to lend will never agree to make a loan with a nominal interest rate of less than zero because: The lender would not get any dollars back from the borrower The lender is better off keeping the dollars than to agree to such a loan It is mathematically impossible for the interest rate to be negative It would not be fair to lend money under such conditions Suppose that inflation is expected to be at -3% per year for the foreseeable future. If the nominal interest rate is 0% per year, then the real interest rate is per year.

Someone with dollar bills to lend will never agree to make a loan with a nominal interest rate of less than zero because: The lender would not get any dollars back from the borrower The lender is better off keeping the dollars than to agree to such a loan It is mathematically impossible for the interest rate to be negative It would not be fair to lend money under such conditions Suppose that inflation is expected to be at -3% per year for the foreseeable future. If the nominal interest rate is 0% per year, then the real interest rate is per year.

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

Someone with dollar bills to lend will never agree to make a loan with a nominal interest rate of less than zero because:
The lender would not get any dollars back from the borrower
The lender is better off keeping the dollars than to agree to such a loan
O It is mathematically impossible for the interest rate to be negative
It would not be fair to lend money under such conditions
Suppose that inflation is expected to be at -3% per year for the foreseeable future.
If the nominal interest rate is 0% per year, then the real interest rate is
per year.

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