Optimizing economic agents use the real interest rate when thinking about the economic costs and returns...

 

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Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 2.03% at a time when inflation is around 4.36%. a. For the average saver, the real rate of interest on his or her savings is (Round your response to two decimal places and use a minus sign if necessary.) b. If banks expect that the rate of inflation in the coming year will be 5.38% and they want a real return of 10% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places.) %. c. If the economy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is . (Borrowers or Lenders) Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 2.03% at a time when inflation is around 4.36%. a. For the average saver, the real rate of interest on his or her savings is (Round your response to two decimal places and use a minus sign if necessary.) b. If banks expect that the rate of inflation in the coming year will be 5.38% and they want a real return of 10% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places.) %. c. If the economy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is . (Borrowers or Lenders)

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a The real rate of interest can be calculated as the nominal interest rate minus the inflation rate ... View the full answer