1) Which do you think has a greater effect on the consumer price index - a 10% increase in the price of chicken or a 10% increase in the price of gold?  Why? 2) Explain the meaning of nominal interest rate and real interest rate.  How are they related?   3) If the price of a Navy submarine rises, is the consumer price index or the GDP deflator affected more?  Why?

Q: Which of the following give the nominal value of a variable? Check all that apply. Maria's wage is…

A: The main distinction b/w the nominal variables and real variables is that the former is defined in…

Q: Below are some data from the land of milk and honey.   Year Price of Milk (€) Quantity of Milk…

A: 1.

Q: Assume the nominal interest rate is 17 percent and the expected rate of inflation is 12 percent.…

A: The real interest rate refers to the inflation adjusted interested rate. It can be calculated by…

Q: Calculate the answers below, rounding to two decimal places. Fill in the missing values.   The CPI…

A: Gross Domestic Product (GDP) is defined as the monetary value of all the final good and services…

Q: True or false? The nominal rate of interest is the difference between the real rate and the…

A: Nominal interest rate is the interest rate which is stated in loan agreement . It is the rate of…

Q: In which situation is the real interest rate highest? In which situation is the real interest rate…

A: Nominal interest rate refers to the interest rate before taking inflation into account. A real…

Q: Calculate nominal interest rate in the economy when real interest rate is 7% and inflation rate is…

A: # in an economy given the nominal interest rate, and inflation rate the real interest is given to be…

Q: Say in a hypothetical economy, people consume only two goods – nasi lemak premium and shoes. The…

A: Consumer spends their money on goods and services to get utility. The expenditure of the consumer…

Q: Suppose that the nominal rate of interest is 7% and the expected inflation rate is 3%. According to…

A: Fishers’ equation considers that the money supply and the price level lies equal and proportional to…

Q: Question 8 In which situation is the real interest rate lowest? O The nominal interest rate is 8%…

A: The real interest rate of a bond or loan is calculated by adjusting the actual interest rate to…

Q: Consider a simple economy that produces two goods: pens and erasers. The following table shows the…

A: Nominal GDP is the market value of all final goods and services produced by a nation at the current…

Q: In which of the following situations is it least advantageous to be lending?   Select one: A. The…

A: Answer: When the real interest rate will be the lowest the lending will be the least advantageous.…

Q: The following table shows the value of the consumer price index and the nominal interest rate for…

A: The interest rate that is being adjusted for inflation that depicts to the borrower the real fund…

Q: At the beginning of the year, what is the nominal rate of interest and what is the real rate of the…

A: Interest rate is the percentage amount charged by the lender from the borrower to use his money for…

Q: Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are…

A: Calculate the inflation rate in 2010 as follows:   Inflation rate in year 2010 = [(CPI in year 2010…

Q: If the real rate of interest is 3% and the expected rate of inflation is 6%m calculate the nominal…

A: The interest rate generally refers to the amount paid to the lender in return for the borrowed money…

Q: 4. Go back to the same example from question 3, just above. Consumers in the economy like two goods:…

A: Note:- Since we can only answer up to three subparts, we'll answer first three. Please repost the…

Q: If your nominal income rose by 5.3 percent and the price level rose by 3.8 percent in some year, by…

A: Income of the individuals refers to the total earnings received from the wages, investment in…

Q: For each of the following years, determine the real interest rate. Find the difference between this…

A: Please find the answer below.

Q: Question 18   You borrow money for a new car at a rate of 5%; inflation is at 4%. From this…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 10) The GDP deflator is designed to adjust nominal GDP for changes in the unemployment rate. b. а.…

A: Answer 10) The GDP deflator is designed to adjust nominal GDP for change in the price. The GDP…

Q: Refer to the hypothetical data in the table to answer the three questions Year        nominal…

A: Using Fisher equation to fill the values of nominal interest rate, real interest rate and inflation…

Q: What is the purpose of price index? What is the significance of the base year?

A: Consumer price index is considered as a key indicator of economic performance.

Q: In an hypothetical Economy, the nominal interest rate is 4% and the inflation is 2.8% What would be…

A: The information being given is about some hypothetical economy where:- Nominal interest rate = 4%…

Q: Alyssa spends all of her money on comic books and mandarins. In 2014, she earned $27.00 per hour,…

A: Nominal value of a variable is measured in relation with money. Real value is measured in terms of…

Q: How each of the real interest rate ad the nominal interest rate is determined and explain the…

A: Real rate of interest and nominal rate of interest.

Q: Suppose that Glitter Gulch, a gold mining firm, increased its sales revenues from newly mined gold…

A: Change in total revenue can be due to change in price or real output.

Q: An economy produces two goods, x, and y. A year ago the price of x was $4 and the price of y was $6.…

A: A year ago the price of goods x = $4 A year ago the price of goods y = $6 Today the price of goods x…

Q: In an economy the nominal interest rate is 6% and the inflation is 4%. Calculate real interest rate

A: Following are the given values: Nominal interest rate = 6% Inflation  rate = 4%

Q: Suppose that the nominal rate of interest is 6 percent and the inflation premium is 1 percent. What…

A: Real interest rate is adjusted for inflation.

Q: The CPI in 2016 was 1.2 and the CPI in 2017 was 1.4. In 2017, lim got a raise of 5% in his salary.…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Refer to the hypothetical data in the table to answer the three questions. What was the real…

A: According to Fisher Effect Real interest rate = Nominal interest rate - Inflation rate.

Q: Q3: Suppose in UAE consists of 200 books and 290 Computers The table below shows data on prices for…

A: a. In 2014 Price of books (PB) = $1.40 Quantity of books(QB) = 200 Price of computers (PC) = 200…