A business borrows from a bank at 7 percent but expects 3 percent general inflation in the economy. What are the nominal and real rates of interest facing this borrower?
What will be an ideal response?
The borrower's nominal interest rate is 7 percent and the real interest rate is 4 percent.
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The asset demand for money is related to which function of money?
A) standard of deferred payment B) store of value C) medium of exchange D) unit of accounting
The majority of Americans at the end of the colonial period were of
(a) French origin. (b) British origin. (c) German origin. (d) Dutch origin.
An externality arises when a person engages in an activity that influences the well-being of
a. buyers in the market for that activity and yet neither pays nor receives any compensation for that effect. b. sellers in the market for that activity and yet neither pays nor receives any compensation for that effect. c. bystanders in the market for that activity and yet neither pays nor receives any compensation for that effect. d. Both (a) and (b) are correct.
If the price of a car in the United States is $22,000, and the exchange rate between the dollar and the Japanese yen falls from 125 yen to 105 yen per dollar, then the price of the American car in Japan will
A. rise. B. fall. C. remain the same. D. be irrelevant, because the Japanese government will impose restrictions on imports from the United States.