If a lender wants to earn a real interest rate of 3% and expects inflation to be 3%, he/she should charge a nominal interest rate that:
A. is at least 7%.
B. equals the real rate desired less expected inflation.
C. equals the real rate desired plus expected inflation.
D. is anything above 0%.
Answer: C
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Your neighbor has just planted some fragrant flowers. The wonderful scent drifts into your room and makes you happy
A) This scent is an internal cost to you. B) This cannot be an externality since you are enjoying the scent. C) This is an externality since you get a benefit from your neighbor's flowers. D) The social cost of this activity is entirely borne by you neighbor.
A baker can produce two products: cupcakes and pies. The table below is the baker's production possibilities schedule:Production Possibilities ScheduleProductABCDEFCupcakes01220365681Pies1086420In moving from combination F to E, the opportunity cost of an additional 2 pies is
A. 2 cupcakes. B. 20 cupcakes. C. 56 cupcakes. D. 25 cupcakes.