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The benefit of saving is the:
a. inflation rate
b. real interest rate
c. saving rate
d. nominal interest rate
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Solved in 3 steps
- The prime interest rate is the rate that banks charge their best customers. Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years would it have been best to be a lender? Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years given would it have been best to be a borrower?The Nominal Interest rate and inflation rate in an economy is same. What will be the real interest in such case?Year Price of T-Shirt Quantity of T-Shirt Price of Pajamas Quantity of Pajamas 2015 10 120 12 200 2016 12 300 15 200 2017 14 275 18 180 Calculate the inflation rate for 2015, 2016 and 2017. Given the following on a closed economy.C = 40 + 0.8Yd C= consumptionI = 55 – 200r I= InvestmentG = 20 G = government spendingT = 20 T = TaxesYe = 400 Ye = National Incomer = rate of interest 3. Determine the following: The equilibrium level of consumptionThe level of investmentThe level of interest rateThe level of Private savingsThe level of Public savingsThe level of national savings
- Need help with this. Thanks! 3. This year Anjun's monthly pay rose from $1000 (last year's rate) to $1100 (this year's rate). During the year the inflation rate for consumer products was 12%. A. What happened to Anjun's nominal income? (up or down, and by what percent?) B. What happened to Anjun's real income? (up or down and by what percent?If inflation is currently 2.55% and a bank is lending money at 7.75% interest, what is the real interest rate the bank is earning on its loans?If nominal interest rate is 6% and inflation is 8%, what is the real interest rate?
- Is an increase in real interest rate always proportional to an increase in the growth rate of money supply (long run)?(b) It is given that the nominal income rose by 5% from the base year to the subsequent year. Since the growth in nominal income is less than the rate of inflation, the family is worse off in terms of what they are able to buy.The__________________ is the nominal interest rate minus the rate of inflation. a)annualized interest rate b)nominally adjusted c)real interest rate d)real GDP
- Assume that in Azerbaijan, Alyana deposits $5,000 in the bank for a single year. Given the following cases, answer the questions. CASE 1: inflation = 0%, nominal interest rate = 5% CASE 2: inflation = 5%, nominal interest rate = 10% CASE 3: inflation = 10 %, nominal interest rate = 15% In which case does the real value of your deposit grow the most? Assume the tax rate is 30%. In which case do you pay the most taxes? Compute the after-tax nominal interest rate,then subtract inflation to get the after-tax real interest rate for both cases. Answer all partsExplain the nominal interest rate and effective interest rate. When both become the same number and when both become different number?Suppose that at the start of 1999, Ari invests their money in a savings account earning 3.6% interest. If inflation is 1% during 1999, calculate the real interest rate on Ari’s savings account by the end of 1999. Has the inflation-adjusted value of Ari’s savings increased or decreased?
