n 1981, many interest rates in the United States were 15%, but the inflation rate was 10%. In 2015, many interest rates were less than 1%, and the inflation rate was 2%. a. What were the real interest rates in 1981 and 2015? b. all else equal, how does the drop in interest rates between 1981 and 2015 affect the quantity of loanable funds supplied?
n 1981, many interest rates in the United States were 15%, but the inflation rate was 10%. In 2015, many interest rates were less than 1%, and the inflation rate was 2%. a. What were the real interest rates in 1981 and 2015? b. all else equal, how does the drop in interest rates between 1981 and 2015 affect the quantity of loanable funds supplied?
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 6P
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In 1981, many interest rates in the United States were 15%, but the inflation
rate was 10%. In 2015, many interest rates were less than 1%, and the
inflation rate was 2%.
a. What were the real interest rates in 1981 and 2015?
b. all else equal, how does the drop in interest rates between 1981 and
2015 affect the quantity of loanable funds supplied?
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