If a lender desires to earn a return of 4 percent on a loan and the anticipated rate of inflation is 3 percent, the lender should charge a
A. Real interest rate of -1 percent.
B. Real interest rate of 1 percent.
C. Nominal interest rate of -7 percent.
D. Nominal interest rate of 7 percent.
Answer: D
You might also like to view...
In 2009, Samoa changed from everyone driving on the right side of the road to everyone driving on the left side of the road. Although everyone agreed that it was important to drive on the same side of the road, some Samoans were not happy about the change. This created a disagreement about which Nash equilibrium was the best equilibrium, and therefore represented
A) an assurance game. B) a pure coordination game. C) a battle of the sexes game. D) a prisoner's dilemma game.
Evaluate the following statement. "I used my own money, my own land and my own equipment to start my business. Therefore I don't have any costs associated with running my business"
What will be an ideal response?
Suppose an oligopoly consists of two firms. Firm A lowers price and Firm B responds by lowering its price by the same amount. If average costs and industry output remain the same, which of the following will occur?
A) The profits of the two firms will increase. B) The profits of the two firms will decrease. C) The profits of the two firms will remain the same. D) Barriers to entry will come tumbling down and new firms will enter.
In a monopolistically competitive scenario, the demand curve for an existing firm ____ when firms exit the industry
a. becomes more inelastic b. becomes vertical c. becomes horizontal d. becomes more elastic