Which of the following statements is correct? O A. Nominal interest rate = Inflation rate + Price index B. Nominal interest rate = Real interest rate - Inflation rate O C. Nominal interest rate = Inflation rate + Real interest rate O D. Nominal interest rate = Real interest rate + Inflation rate O E. Nominal interest rate = Inflation rate Real interest rate

Which of the following statements is correct? O A. Nominal interest rate = Inflation rate + Price index B. Nominal interest rate = Real interest rate - Inflation rate O C. Nominal interest rate = Inflation rate + Real interest rate O D. Nominal interest rate = Real interest rate + Inflation rate O E. Nominal interest rate = Inflation rate Real interest rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that John has a car loan with a nominal interest rate of 4%. If the actual inflation rate is 3%, then the real rate is 3% 4% O 7% O 1%
You know that the consumer price index (CPI) at the beginning of this year was 200 and the rate of inflation was 12.5%; this would mean the CPI at the end of the year was a. 225 Ob.275 O c. 150 d. 175 e. 250
In which of the following situations isit most advantageous to be lending? Select one: O A The real interest rate is 2 percent and the nominal interest rate is 10 percent. O B. The nominal interest rate is 4 percent and the real interest rate is -2 percent. OC. The nominal interest rate is 1 percent and the real interest rate is 0 percent. O D. The real interest rate is 4 percent and the nominal interest rate is 7 percent.
QUESTION 3 If nominal interest rate increased by 0.2 percentage points and inflation increased by 0.4 percentage points, then the real interest rate O A. increased by 0.2 percentage points O B. increased by 0.4 percentage points O C. decreased by 0.2 percentage points O D. decreased by 0.4 percentage points
If the inflation rate is 3 percent and the nominal interest rate is 8 percent, how much is the after-tax real interest rate if the government imposes a 20 percent interest income tax? O a. 3.4 percent O b. 4 percent O c. None of the above O d. 5.4 percent.
Output growth will equal O when which of the following conditions is satisfied? Select one: a. 0% nominal money growth; 2% inflation. O b. 2% nominal money growth; 2% inflation. O c. 3% nominal money growth; 0% inflation. O d. -2% nominal money growth; 1% inflation. O e. None of the above.
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
Table 6.2 Year CPI 1 150 154 152 4 156 160 Refer to Table 6.2. If a worker earned $40,000 years ago when the CPI was 140, what is the minimum salary he must earn in year 2 to "more than keep up with inflation"? O $44,000.00 O $43,428.57 O $42,857.14 O $44,571.43 3.
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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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