A borrower who makes a $1,000 loan for one year and earns interest in the amount of $75, earns what nominal interest rate and what real interest rate if inflation is two percent?
A. A nominal rate of 7.5% and a real rate of 5.0%.
B. A nominal rate of 5.5% and a real rate of 2.0%.
C. A nominal rate of 7.5% and a real rate of 9.5%.
D. A nominal rate of 7.5% and a real rate of 5.5%.
Answer: D
You might also like to view...
A sharp rise in the real value of stock prices, which is independent of a change in the price level, would best be an example of ________.
A. a change in the degree of excess capacity B. a change in real value of consumer wealth C. the interest-rate effect D. the real-balances effect
Prospective sunk costs
A) are relevant to economic decision-making. B) are considered as investment decisions. C) rise as output rises. D) do not occur when output equals zero.
Figure 9-1
?
In Figure 9-1, at $7,000 billion real GDP,
A. inventories are increasing. B. spending falls short of output. C. spending exceeds output. D. inventories are falling.
Personal income will equal disposable income when:
A. Corporate profits are zero B. Personal taxes are zero C. Transfer payments are zero D. Social Security contributions are zero