Suppose the nominal interest rate on a one-year car loan is 8% and the inflation rate is expected to be 3% over the next year. Based on this information, we know:
A. the ex post real interest rate 11%.
B. at the end of the year, the borrower pays only 5% in nominal interest.
C. the lender benefits more than the borrower because of the difference in the nominal versus real interest rates.
D. the ex ante real interest rate is 5%.
Answer: D
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Refer to the above table. The table gives the combinations of real disposable income and real consumption for a college student for a year. What is the value of the average propensity to consume when real disposable income equals $4,000?
A) 0.7 B) -0.45 C) 1.45 D) 0.69
Quotas redistribute income from consumers to domestic producers
Indicate whether the statement is true or false
If firms have different costs and market demand only supports the quantity the incumbent produces, then the incumbent's threat to use limit pricing
A) is credible. B) is not credible. C) would be illegal. D) is unable to be determined with the information given.
You own a tract of trees and are deciding whether to harvest them now or next year. If you harvest them now, you can invest the proceeds and get a return of 5% on your investment. What should you do?
a. Let the trees grow as long as their dollar worth increases by more than 5% b. Let the trees grow c. Cut down the trees, and sell them d. Let the trees grow as long as their dollar worth increases by less than 5%