Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 9, Problem 5CQ
To determine
Identify the current interest rate on ten-year government bonds.
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What is the difference between real and nominal interest rates?
why is the distinction important? What factors change interestrates?
What might cause interest rates to be low one year and high the
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would bonds still be a good option for investment if interest rates are negative?
Chapter 9 Solutions
Economics: Private and Public Choice
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Similar questions
- Describe how interest could be good or bad, depending on the situation, and explain why interest rates are currently so low?arrow_forwardBankers make loans in the Nominal Interest Rate, so why do bankers care so much about the Real Interest Rate?arrow_forwardwhat are the economic goals of a low-interest rate?arrow_forward
- "The rate of return to bonds should be near equal to the equilibrium interest rate in the credit market." True or False?arrow_forwardSeveral factors may influence interest rates for individual securities in an economy like the United Kingdom. One such factor is inflation. Explain fully how the factor may influence interest rates of individual securities in an economy.arrow_forwardwhat happens if consumers expect future interest rates to fall?arrow_forward
- Do the interest rates reflect the market interest rate?arrow_forwardDo the financial institutions usually quote the interest rate on an annual basis?arrow_forwardDraw a graph of a typical Real and Nominal Interest Rates (Three-Month TreasuryBills), and discuss why it usually takes that change.arrow_forward
- the equilibrium real interest rate in some country is quite low. What could be three possible explanations for this situation?arrow_forwardIs it possible for a one-year coupon bond to have a negative nominal interest rate? Explain, how?arrow_forwardWhat role do interest rates play in consumer spending and savings, and how do central banks use interest rate adjustments to influence economic activity?arrow_forward
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