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In: Economics

​Refer the figure above. Which of the following statement is true?

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Refer the figure above. Which of the following statement is true? 

if the nominal interest rate is 105 and the inflation rate is 45, the market for loanable funds will be in equilibrium.

When the domestic real interest rate is 6%, the current account will be balanced 

The equilibrium nominal interest rate is 6%.

The inflation rate is necessarily 0%, since the nominal and real interest rates are identical in equilibrium

Solutions

Expert Solution

Answer
Option 3
the equilibrium nominal interest rate is 6%

the market is in equilibrium at Qd=Qs
where
Q=60 billion of dollars and i=6%
the nominal and real interest rate is not equal in the equilibrium.

Rahul Sunny answered 2 years ago
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