Based on the real interest rate, who tends to benefit from unanticipated inflation in terms of borrowing and lending?
What will be an ideal response?
The real interest rate is the nominal interest rate minus the anticipated inflation rate. During periods of unanticipated inflation, borrowers tend to benefit and lenders tend to lose. If the nominal interest rate is fixed, the real interest rate tends to become very low or even negative as inflation increases. Borrowers enjoy paying the low real interest rate, but lenders do not enjoy earning it.
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With successful collusion that maximizes the total profits of the firms in the market,
a. the market demand curve shifts leftward b. monopoly power allows the sellers to charge whatever price they want for their joint output level c. each firm faces a horizontal demand curve for its output d. each firm can sell as much output as it chooses at the price set by the cartel e. the pricing decision is constrained by the market demand curve
Ellie has been working for an engineering firm and earning an annual salary of $80,000 . She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of
deposit on which she was earning annual interest of $500 . Ellie's annual economic costs will equal a. $55,200. b. $75,200. c. $80,500. d. $135,700.