Sarah wants to make an 8% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge a nominal interest rate of _________________________. 13% 3% 5% 8%
Sarah wants to make an 8% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge a nominal interest rate of _________________________. 13% 3% 5% 8%
Chapter13: Inflation
Section: Chapter Questions
Problem 10SQ
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Question
Sarah wants to make an 8% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge a nominal interest rate of _________________________.
13%
3%
5%
8%
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