Answered: The nominal interest rate is: A not…

The nominal interest rate is: A not adjusted by inflation. B less than the real rate of interest when there is inflation. C inflation. adjusted D the real rate of interest when there is inflation.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Macroeconomic Measurements, Part I: Prices And Unemployment

Section: Chapter Questions

Problem 13QP

See similar textbooks

Related questions

Q: You put money into an account that earns a 8 percent nominal interest rate. The inflation rate is 3…

A: The after- tax-real rate of interest is the actual financial benefit from an investment after…

Q: During periods of deflation, the nominal interest rate will be a. higher than the real interest…

A: Introduction Deflation is a decrease in an economy's general level of prices and a rise in the…

Q: Assume the nominal interest rate is 17 percent and the expected rate of inflation is 12 percent.…

A: The real interest rate refers to the inflation adjusted interested rate. It can be calculated by…

Q: In which situation is the real interest rate highest? In which situation is the real interest rate…

A: Nominal interest rate refers to the interest rate before taking inflation into account. A real…

Q: The nominal interest rate will be less than the real interest rate when A. the rate of inflation…

A: The correct option is (c).

Q: In 2006, the market interest rate was 12% and the inflation rate is expected to be 10%. Calculate…

A: Fisher equation explains the relationship between the nominal interest rate and the real interest…

Q: The government of the United States is worried that the inflation rate is too high. What fiscal…

A: Option D To reduce the inflation rate, the government has to undertake steps to reduce the level of…

Q: If the real interest rate is 11% and the rate of inflation is 3%, then if a firm can invest in a…

A: Introduction The nominal interest rate refers to the rate of interest before adjusting for…

Q: If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then what is the real…

A: The interest rate is the amount paid for the money for not using for the purpose of consumption in…

Q: If the inflation rate is 2 percent and the real interest rate is 4 percent, the nominal interest…

A: In an economy, inflation and different types of interest rate such that real and nominal interest…

Q: n inflation rate that tends to be a leading indicator of future inflation rates is the a. GDP price…

A: The GDP price index measures the change in the price level of final goods and services produced in…

Q: illan Le What is the real interest rate?

A: Real interest rate is defined as the rate of return adjusted for inflation. It is the real return…

Q: Who would be the least affected by inflation? (Benefit from Inflation) a man with a fixed interest…

A: Inflation is the general increase in price level which lowers the purchasing power of all the people…

Q: he inflation rate for July was 5.4%. Averages wages increased by 4%. What has happened to the…

A: Inflation is the rise in the aggregate level of prices. Inflation leads to a reduction in the…

Q: When inflation rises and nominal wages grow with the rate of inflation. Do you younger households…

A: Nominal wages, sometimes known as "money wages," refer to pay rates that have not been adjusted for…

Q: Real Income Joshua Vermier of Sacramento, California, received a raise after his first year on the…

A: Income comprises salary, wages, gratuity, other profit, or incidental benefit of any kind obtained…

Q: If prices of goods and services (CPI) rises by 10% and also nominal wages rise by 10% tax…

A: Nominal wage is the money wage received. However, the real wage is the wage adjusted for inflation.…

Q: K The nominal interest rate is 3 percent a year and the real interest rate is 6 percent a year. What…

A: To find the inflation rate (π) when the nominal interest rate (i) and the real interest rate (r) are…

Q: Is the Market interest rate commonly known as the nominal interest rate? Why?

A: Nominal interest rate is the amount of money that we need to pay or we receive without considering…

Q: The table below pertains to Studious, an economy in which the typical consumer’s basket consists of…

A: According to the question given, the market data of the economy which have a typical consumer basket…

Q: Sally has a credit card balance of $1,000. The credit card company charges a nominal interest rate…

A: The interest rate increase would result in an increase in the inflation. The increase in the…

Q: real interest rate is

A: Real interest rate is the rate which a person has after deducting the inflation Or price rise effect…

Q: An increase in the expected inflation rate increases the real rate of interest the nominal rate…

A: Nominal interest rate refers to the interest rate which is paid in nominal terms on principal.

Q: Inflation represents the rate of increase of the average price of goods. If inflation decreases from…

A: Inflation refers to the rise in general price level over period of time . Inflation reduces the…

Q: Suppose the consumer price index (CPI) in 1983 was 100. In 1994, the CPI was 150. In 1994, a bank…

A: Real salary =Salary in the given year CPI of the year*100 Real salary of 1983=16000100*100=16000

Q: If the nominal interest rate is 5 percent and the inflation rate is 2 percent, what is the real…

A: Nominal interest rate is the rate of interest before the adjustments of inflation. given: Nominal…

Q: A person who is lending money o S or B A person receiving a fixed income S or B A person with money…

A: High inflation makes some people worse off and some people better off.

Q: If inflation is expected to increase, A. the nominal interest rate will increase. B.…

A: Real Interest Rate: The real interest rate is the rate that excludes or does not account the…

Q: B) Only the lenders benefit.

A: Consider borrowers and lenders who agree to loans with fixed nominal interests rate if inflation is…

Q: Calculate inflation when nominal interest rate is 8% and the real interest rate is 2% Help!

A: # The formula for real interest in the economy is explained by the fisher's equation as:- Real…

Q: Makayla bought a $1,000, 5-year inflation - indexed bond that had a real interest rate of 5.10% when…

A: The bond market is critical to the economy because it helps governments and businesses to raise…

Question

The nominal interest rate is:

A not adjusted by inflation.

B less than the real rate of interest when there is inflation.

C inflation. adjusted

D the real rate of interest when there is inflation.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 - answer

VIEW

Step 2 - explanation

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The real interest rate is 1 the market rate of interest charged by banks. 2 the rate of interest that banks charge their best customers. 3 the nominal rate of interest minus the inflation rate that individuals expect. 4 the expected inflation rate minus the cost of borrowing.
The higher the expected rate of inflation, A) the lower is the nominal rate of interest. B) the higher is the real rate of interest. C) the lower is the real rate of interest. D) the higher the real and nominal rates of interest
Macmillan Learning You are considering purchasing a car, and you are offered a loan with a nominal interest rate of 5%. Assume inflation is expected to average 2% over the life of the loan. What is the real interest rate? %
Real interest rate is equal to Nominal Interest rate when inflation is 2% True/False
The nominal interest rate will be less than the real interest rate when A. the rate of inflation is positive but decreasing. B. the real interest rate is negative. C. the rate of inflation is negative (that is, deflation) D. the rate of inflation is positive and increasing.
Calculate real interest rate if Nominal Interest rate is 8.2% and inflation is 6.1%
Put the following terms into a meaningful equation and then explain in words why this relationship is important to your everyday life: a. Real Interest Rate (r) b. Inflation (π) c. Nominal Interest Rate (i)
In 2006, the market interest rate was 12% and the inflation rate is expected to be 10%. Calculate the real interest rate.
In which situation is the real interest rate lowest? Group of answer choices The nominal interest rate is 11% and the inflation rate 9%. The nominal interest rate is 8% and the inflation rate 5%. The nominal interest rate is 25% and the inflation rate 30%. The nominal interest rate is 2% and the inflation rate 1%.
Interest, inflation, and purchasing power Suppose Dalia is a fan of young-adult fiction and buys only young-adult books. Dalia deposits $2,000 into a savings account that pays an annual nominal interest rate of 20%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a young-adult book has a price of $20.00. Initially, Dalia's $2,000 deposit has a purchasing power of #????? young-adult books. For each of the annual inflation rates given in the following table, first determine the new price of a young-adult book, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dalia's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest young-adult book. For example, if you find that the deposit will cover…
Find the value of inflation if real interest rate is 0 and nominal interest rate is 4.6%
Sally has a credit card balance of $1,000. The credit card company charges a nominal interest rate of 16 percent a year on unpaid balances. The inflation rate is 6 percent a year. Calculate the real interest rate that Sally pays the credit card company. The real interest rate that Sally pays the credit card company is ------- percent a year.