Suppose that the nominal interest rate is equal to 4.2% and the inflation rate over the same period is 1.5%. What is the real interest rate? Use the exact formula and express your answer in percentage rounded to the nearest first decimal.

Q: The CPI is 120 in year 1 and 150 in year 2. All inflation is anticipated. If Sonali Bank charges a…

A: In macroeconomics, interest can be nominal or real. The real interest rate is the nominal interest…

Q: What is  the difference between interest rates and inflation rates? Give an example of each.

A: Interest Rate and Inflation rate are different from each other. Inflation is the rise in the general…

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: 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: If the nominal interest rate is 10 percent and the inflation rate is 4 percent, then the real…

A: Nominal interest rate is the current rate of interest.Real interest rate is the change in interest…

Q: Can the nominal interest rate be negative? Discuss.

A: By fisher's equation it is said that, Nominal interest rate = Real interest rate + Expected…

Q: According to the Fischer equation, if the nominal interest rate is 8% and inflation is running at 4%…

A: Nominal interest rate is the interest rate that is received or paid on a loan. Real interest rate…

Q: )Suppose that on January 1, 2019 a bank lends $20,000 to a person. The bank and the individual both…

A: The inflation rate is basically an increase in the price level from one period to another. If the…

Q: Given the information in the table, what is the current-year CPI? Round to one decimal place. If…

A:

Q: Knowing that the average annual accumulated inflation in 2018 was 3.75%, calculate how much the…

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

Q: Discuss the relationship between nominal and effective interest rates?

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: The relationship between nominal and real interest rates continues to hold when there is deflation…

A: In an economy, the difference between actual and expect interest rate will lead to affect the…

Q: Find the inflation rate in the economy if the real interest rate is 4% and Nominal Interest rate is…

A: # in an economy we can easily find the prevailing inflation rate by using the fishers equation which…

Q: Assume that in 1974, interest rates were 7.443% and the rate of inflation was 12.065%. What was the…

A: Given :  In 1974,nominal interest rate=7.443%  inflation rate =12.065%.

Q: Dennis buys a house in 1973 and finances it with a mortgage that carries an annual interest rate of…

A: The real interest rate basically is the interest rate that has been adjusted after taking into…

Q: If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then what is the real…

A: The interest rate is the amount paid for the money for not using for the purpose of consumption in…

Q: Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that…

A: Cho's deposits $3000 in a bank account that pays an annual nominal interest rate of 10%. The price…

Q: You are given the following information about the economy: the nominal interest rate = 10 percent,…

A: Given information: The nominal interest rate is 10% The real rate of interest is 3%

Q: Assume that n= 1. The real interest rate is %. (Round your response to two decimal places.)

A: Real Interest Rate refers to the interest rate that has been adjusted for inflation. It shows the…

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: Assume you just deposited $1,000 into a bank account. The current real interest rate is 3% and…

A: A real interest rate is adjusted to remove the effects of inflation while a nominal interest rate…

Q: What is the real interest rate if the nominal interest rate is 8% and the expectedinflation rate is…

A: Nominal interest rate minus inflation rate is the real interest rate. Nominal interest rate is 8%…

Q: Illustrate the relationship between nominal and effective interest rates?

A: The interest rate can take two forms which are nominal interest rate and effective interest rate.…

Q: Suppose that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Then…

A: The real interest rate on this loan will be lower because if the inflation is more than expected…

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: Suppose a person works hard at a job after graduation and after her first year, her effort is…

A: A consumer like the person in the question is never bothered about the money in numerical terms…

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: What is the inflation rate in 2019? Has it increased or decreased since 2018 and by how much?  If…

A: GDP deflator reflects what's happening to the overall level of prices in the economy.

Q: If the nominal interest rate is 10 percent and the real interest rate is 5 percent, the inflation…

A: Inflation rate: It is the rate of increase in the prices in a particular time period.

Q: Do you think a negative nominal interest rate can happen?  What about a negative real interest rate?…

A: When people borrow money from the lender, a proportion of the amount borrowed is paid additionally…

Q: The table below shows the annual change in the average nominal wage and inflation rate since 2008.…

A: The difference between yearly nominal wage growth and the annual inflation rate is used to compute…

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: Analyze the computation of inflation from a GDP deflator, and the accuracy it holds as compared to…

A: The GDP deflator is identified as the inflation in an economy, which is calculated by dividing…

Q: Suppose that over the past year, the real interest rate was 4 percent and the inflation rate was -1…

A: Inflation is the rate at which the value of a currency is falling and, consequently, the general…

Q: Consider a simple economy that produces only three products: hot dogs, torches and golf balls. Use…

A: CPI stands for consumer price index represent the cost of living which is ratio of change in cost of…

Q: If nominal wage growth is greater than the sum of change in labor productivity less inflation, does…

A: Real wages square measure wages adjusted for inflation, or, equivalently, wages in terms of the…

Q: Write an equation that defines the real interest rate. Use the equation to explain why unexpectedly…

A: Since you have asked multiple questions, we will answer only the first question for you. Kindly…

Q: Define the Nominal Interest Rates?

A: The interest rate refers to the payment rate that is charged by a lender on a borrower for using the…

Q: assume instead that the nominal interest rate is 4 percent and the expected rate of inflation is…

A: Nominal interest rate is the interest rate before taking inflation into account. It does not…

Q: If the real interest rate is 6% and the inflation rate is 12%, then the nominal interest rate equals…

A: Nominal interest rate=inflation/real interest rate =12/6=6

Q: Suppose the equilibrium real interest rate is 5% and inflation rate is 3%. Determine the equilibrium…

A: Real Interest rate = 5% Inflation rate = 3%

Q: Does the BLS method of assessing inflation imply that consumers actually purchase the same goods and…

A: The consumer price index is an economic instrument used to measure the changes in the price level in…

Q: Consider an economy where: The real rate of interest The nominal rate of interest 4.11% 7.09%…

A: Real Interest Rate = 1 + Nominal Interest Rate1 + Inflation Rate -1 Real interest rate = Nominal…