Kaitlin has $10,000 of savings that she may deposit with her local bank. Kaitlin wants to earn a real rate of return of at least 4 percent and she is expecting inflation to be exactly 3 percent. What is the lowest nominal interest rate that Kaitlin would be willing to accept from her local bank?
What will be an ideal response?
7%
You might also like to view...
Which of the following is NOT a financial institution?
A) a life insurance company B) a pension fund C) a credit union D) a business college
Suppose that the Bank of Japan buys U.S. dollar assets with yen-denominated assets. Everything else held constant, this transaction will cause ________ in the foreign assets held by the Federal Reserve and ________ in the U.S. monetary base
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease
Aggregate output and the interest rate are ________ related to government spending and are ________ related to taxes
A) positively; positively B) positively; negatively C) negatively; positively D) negatively; negatively
Which statement best describes the challenge in determining whether a trade surplus is good or bad?
a. The challenge in determining whether a trade surplus is good or bad is to understand how the international flows of goods and services are connected with international flows of financial capital. b. The challenge in determining whether a trade surplus is good or bad is to understand how the international flows of goods are connected with international flows of financial capital. c. The challenge in determining whether a trade surplus is good or bad is to understand how the international flows of services are connected with international flows of financial capital. d. The challenge in determining whether a trade surplus is good or bad is to understand how the international flows of investments are connected with international flows of financial capital.