Consider someone who borrows $10,000 to buy a car at a fixed interest rate of 9%. If inflation is 3% at the time the loan is made, what is the real interest rate at which the loan must be repaid, and to what level would the interest rate have to rise for the real interest rate on the loan to be zero?
a. 4.5%; 7.5%
b. 6; 9%
c. 8%; 10%
d. 6; 12%
b. 6; 9%
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It is likely true that education produces positive externalities
a. True b. False
Which of the following is not one of the four principles of individual decision making?
a. People face trade-offs. b. Trade can make everyone better off. c. People respond to incentives. d. Rational people think at the margin.
One area of disagreement among economists is the impact that income tax cuts will have on a budget deficit. Explain in detail the reasoning of both sides of this argument
The answer is: "The difference between the price buyers pay for a good and the maximum or highest price they would have paid for the good." This is the definition for
A) taxes. B) producers' surplus. C) consumers' surplus. D) the sum of producers' and consumers' surpluses. E) the welfare triangle.