Question
In: Economics
If the nominal interest rate is 0.09 and the (expected) inflation rate is 0.03, what is...
If the nominal interest rate is 0.09 and the (expected) inflation rate is 0.03, what is the real interest rate? (Answer as a decimal.)
Consider an economy with only one good: corn. In 2010 the price of corn was 6.08 and in 2011 the price was 7.9. What was the inflation rate? (Answer as a decimal. Round to three decimal places.)
Let NGDP be 1,825 and the money supply be 474. What is velocity? (Round to one decimal place.)
Solutions
Expert Solution
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1. Real Interest Rate = Nominal Interest rate - Inflation rate
= 0.09 - 0.03
= 0.06 Real Interest Rate.
2. Inflation Rate = ( price index in current year - price index in base Year)/ price index in base year * 100
= 7.9 - 6.08/ 6.08* 100
= 29.9
decimal = 0.299
3. Velocity = NGDP/ Money supply
= 1.825/474
= 0.003
Rahul Sunny answered 2 years agoRelated Solutions
If the nominal interest rate is 0.09 and the (expected) inflation rate is 0.03, what is...
If the nominal interest rate is 0.09 and the (expected)
inflation rate is 0.03, what is the real interest rate? (Answer as
a decimal.)
Consider an economy with only one good: corn. In 2010 the price
of corn was 6.08 and in 2011 the price was 7.9. What was the
inflation rate? (Answer as a decimal. Round to three decimal
places.)
Let NGDP be 1,825 and the money supply be 474. What is velocity?
(Round to one decimal place.)
The nominal rate of interest is 7% and the real rate of interest is 3%. What is the expected inflation rate?
The nominal rate of interest is 7% and the real rate of
interest is 3%. What is the expected inflation rate?
If the nominal rate of interest is 13.02% and the real rate of interest is 8.01%, what is the expected rate of inflation?
If the nominal rate of interest is 13.02% and the real rate
of interest is 8.01%, what is the expected rate of inflation?
If the nominal interest rate is 3.25% and expected inflation is 2%, what is the real...
If the nominal interest rate is 3.25% and expected inflation is
2%, what is the real interest rate? Calculate it using the Fisher
Effect and the shortened equation.
What happens to expected inflation, nominal interest rate and real money demand when there is a...
What happens to expected inflation, nominal interest rate and
real money demand when there is a permanent decrease in money
supply growth?
Given the nominal interest rate of 14% and the expected inflation of 11%, then the value...
Given the nominal interest rate of
14%
and the expected inflation of
11%,
then the value of the real interest rate is
nothing%.
With the real interest rate equal to
6%
and the expected inflation equal to
3%,
then the value of the nominal interest rate is
nothing%.
A lender prefers a
▼
higher
lower
real interest rate while a borrower prefers a
▼
lower
higher
real interest rate.
10. If the nominal interest rate is 7 percent and expected inflation is 4.5 percent, then...
10. If the nominal interest rate is 7 percent and expected
inflation is 4.5 percent, then what is the expected real interest
rate?
A. 11.5 percent
B. 7.0 percent
C. 4.5 percent
D. 2.5 percent
E. less than 2.5 percent
11. Which of the following statements is (are) correct?
(x) In the U.S., from the early 1980s through the early 1990s, both
inflation and nominal interest rates fell.
(y) If a country had deflation, the nominal interest rate would be...
If the rate of inflation is 4.6%, what nominal interest rate isnecessary for you to...
If the rate of inflation is 4.6%, what nominal interest rate is
necessary for you to earn a 3.4% real interest rate on your
investment? (Note: Be careful not to round any intermediate steps
less than six decimal places.)
Discuss the relationship between the nominal interest rate and the inflation rate. What are the impacts...
Discuss the relationship between the
nominal interest rate and the inflation rate. What are the impacts
of these on the economy?
The interest rate is 10%. The inflation rate is 5% and the expected inflation rate is...
The interest rate is 10%. The inflation rate is 5% and the
expected inflation rate is 10%. The actual real interest rate
is:
less than or equal to -5%
greater than -5% but less than or equal to 0%
greater than 0% but less than or equal to 5%
greater than 5% but less than or equal to 10%
greater than 10%
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