2.You borrowed $1,500 for one year, and agreed to pay back $1,680. At the outset you expected...
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2.You borrowed $1,500 for one year, and agreed to pay back $1,680. At the outset you expected the inflation rate to be 2% over the period of the loan, but it ended at 4%. In this case,
Question options:
the nominal interest rate was 1.12%, the expected real interest rate was 2%, the actual real interest rate ended at 4%. | |
the nominal interest rate was 12%, the expected real interest rate was 14%, the actual real interest rate was 16%. | |
the nominal interest rate was 12%, the expected real interest rate was 10% the actual real interest rate was 8%. |
3.Assume that the nominal interest rate is 3% while we have 5% deflation. In this situation, the real interest rate is:
Question options:
-5% | |
3% | |
8% |
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