Answered: rate of inflation

Business

Economics

rate of inflation

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 8SQP

See similar textbooks

Related questions

Q: Suppose your annual nominal income for the next four years is $78,500, and the annual inflation rate…

A: Nominal income: When the income of a consumer is calculated on the basis of the current year's…

Q: If an investment of P24,500 twenty-four years ago is now worth P55,000, at what rate, compounded…

A: A=P(1+i/n)^nt A-Amount=55000 P-Principle=24500 n-compounding period=2 t=time=24 yrs…

Q: The nominal interest rate currently paid by local commercial banks is 8.5%. If the inflation rate is…

A: Real Interest rate refers to the interest rate that has been adjusted for inflation, reflecting the…

Q: uppose the annual interest rate is R = 0.10 (10%). If the expected inflation rate is πe= 0.04 (4%)…

A: annual interest rate is R = 0.10 (10%) expected inflation rate is πe= 0.04 (4%)

Q: An investment had a nominal return of 10.6 percent last year. The inflation rate was 2.2 percent.…

A: The nominal rate of return is the amount of money generated by an investment before factoring in…

Q: If general price inflation is estimated to be 5% for the next 5 years, 7.5% for the 3 years after…

A: Given:Inflation for first five years= 5%Inflation for next 3 years=7.5%Inflation for following 5…

Q: If the interest rate on a one-year loan is 5%5% and the expected inflation rate is −2%−2% for the…

A: Real interest rate= Nominal interest - Inflation rate Real interest rate is the actual interest an…

Q: The implied real interest rate of 3-month Treasury bills (U.S. government debt of 3-month maturity)…

A: We know, nominal interest rate = Real interest rate + inflation rate

Q: The nominal interest rate is 3.5% and the expected inflation rate is 3.0%. What is the real…

A: The real interest rate is adjusted with inflation but it does not vary with changing inflation as…

Q: expected inflation equals

A: Fisher Effect says that we can calculate the real interest rate by the following formula: r = i - π,…

Q: in two years is P2,308. What is th inflation if the real rate of interest is 10%? 18. If the…

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

Q: I always thought my good friend Rado Coetzee was quite original given his choices. He then once told…

Q: man desires to have P3M money in his savings when he retires after 25 years. This has amount in the…

A: Future worth is the value of a assets at a particular date. It estimates the ostensible future…

Q: The apparent interest rate is 9.18% and the real interest rate is 6%. What is the inflation rate?

A: Interest is the cost of capital. We can use interest in the context of either borrowed funds,…

Q: Nelson, a management trainee at a large New York-based bank, is trying to estimate the real rate of…

A: Real interest rate = Nominal yield - Inflation rate, where Inflation rate = % Change in CPI

Q: Consider a telephone call to London that currently would cost $5. If the real price of telephone…

A: Cost means the expenditure that is incurred in order to produce goods and services. It includes two…

Q: Suppose Neha is a sports fan and buys only baseball caps. Neha deposits $3,000 in a bank account…

A: Purchasing power refers to the value of a currency denoted in terms of the number of goods or…

Q: If an investment has a nominal return of 3.8% per year, while the inflation is expected to be 3.6%…

A: Real return is the interest rate adjusted for inflation. Nominal return does not account for price…

Q: For a given real interest rate, a decrease in the inflation rate would decrease the after-tax real…

A: The relationship between real interest rate, inflation rate, and the nominal interest rate has been…

Q: Suppose Home Depot issues 30-year bonds on which it pays a 5.0% (nominal) interest rate. Further,…

A: As we know Real rate = Nominal interest rate - Actual interest rate we can calculate the following…

Q: Suppose the price level reflects the number of dollars needed to buy a basket of goods containing…

A: Inflation: Inflation is an economic concept that is defined as a rise in the general price level of…

Q: If the nominal interest rate on an asset is 10% and inflation is also 8%, what is the real interest…

A: The nominal interest rate is the percentage increase in money you pay the lender for the use of the…

Q: Abhijit deposits $100 in a bank account that pays an annual interest rate of 5 percent. A year…

A: Deposit=$100Annual interest rate=5%Now,Value of deposit after one year=100+5%Value of deposit after…

Q: nominal interest rate is 4% .Suppose that the actual inflation rate turns out to be 4% as well. What…

A: The Fisher effect depicts the relationship between real and nominal rate of interest…

Q: If banks expect that the rate of inflation in the coming year will be 4.95% and they want a real…

A: The real interest rate is the adjusted interest rate that doesn’t include the effect of inflation…

Q: Suppose you make a loan of $100 that will be repaid to you in 1 year.if the loan is denominated in…

A: Nominal intrest is total of real intrest and rate .Increase in rate can cause increase in nominal…

Q: What is the inflation free (real interest rate) if the market rate is 12.6% and the inflation rate…

A: The interest rate which is calculated without taking in account the value of inflation is known as…

Q: Suppose that the investment function is I = 3,500 − 100r, where r is the real interest rate (in…

A: What Is an Investment? An investment is anything you buy with the hope of making money off of it or…

Q: Your pension is $8,000 per month when you the next year, inflation is 1%. If your pension is indexed…

A: Inflation decreases our purchasing power so Pension income is increased to compensate for that. You…

Q: The.... rate is equa to the ...... rate ...... the ....... rate a) real interest / nominal interest…

A: The question is based on the Fisher equation.

Q: Assume you just deposited $1,000 into a bank account. The current real interest rate is 2%, and…

A: The relation b/w the nominal & real interest rate, as well as inflation, is represented by the…

Q: the real interest rate is 2% and expected inflation is 3%, the nominal interest rate is O-1%. 1%..…

A: Given information, Real interest rate: 2% Expected inflation rate: 3% To find: Nominal interest…

Q: Suppose that a deceased relative had put $1,000 in an envelope in 1954 and you just discovered this…

A: here we can calculate the following terms as follow

Q: he inflation over four consecutive quarter is fl=1%,f2=0.5%, fs-0.5%, f-196. what is the inflation…

A: Here, we calculate the given as follow;

Q: If the nominal interest rate is 8% and the inflation rate is 5%. Using the relevant real interest…

A: Given that, Nominal interest rate = 8% or 0.08 Inflation rate = 5% or 0.05 Present value (PV) =…

Q: If inflation rate is 1% and nominal interest rate is 2.1% What will be the real interest rate

A: The given information is as follows:- Inflation rate in the economy = 1% This shows the general rise…

Q: The nominal interest rate is equal to ? (a).Real interest +inflation (b). Real interest *inflation…

A: Answer - "Thank you for submitting the question, We are authorized to answer one question at a time,…

Q: Using you answer for Question 2, what will be the price per MMBtu of natural gas on June 30, 2022 if…

A: The price per MMBtu can be calculated by using the following equation. Price per MMBtu= Pi*(1+i)t

Q: The nominal interest rate is: A not adjusted by inflation. B less than the real rate of interest…

A: Option (A).

Q: Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the end of the…

A: The real interest rate is adjusted to remove the effects of inflation. A nominal interest rate…

Q: Suppose I start saving for my retirement on my 45th birthday by depositing $1000 in a retirement…

A: Money rate of interest is any declared or given rate of interest. An overall increase in the price…

Q: The ___ is the nominal interest rate minus the rate of inflation. Question 13 options: real…

A: the real inflqtion rate could be calculated as:Real interest rate =1+ Nominal interest rate1+…

Q: If the rate of inflation is 5.7 %, what nominal interest rate is necessary for you to earn a 2.2 %…

A: The nominal interest rate (or money interest rate) is the percentage increase in money you pay the…

Q: Assume the nominal rate of return is 8.63% and the real rate is 4.68%. Find the inflation rate of…

A: The real rate of return formula is the sum of one plus the nominal rate divided by the sum of one…

Q: Over the last 10 years, the average rate of inflation has been 1.51%. What is the purchasing power…

A: The average annual inflation rate over the past 10 years was 1.51%

Q: In wisely planning for your retirement, you invest $22,000 per year for 20 years into a 401K…

A: First we will find Nominal interest rate :- Nominal interest rate = [ ( 1+ real interest rate) ( 1 +…

Question

If the nominal rate of interest is 13.02% and the real rate of interest is 8.31%,

what is the expected rate of inflation?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
If the interest rate on a one-year loan is 5%5% and the expected inflation rate is −2%−2% for the same period, what is the expected real interest rate on the loan?