Real interest rates have, at times, been negative. Why would anyone lending money agree to a negative real interest rate?
What will be an ideal response?
The lender did not agree to a negative real interest rate, but unanticipated inflation occurred. If the actual inflation rate exceeds the anticipated inflation rate, the actual real interest rate received by lenders and paid by borrowers can end up negative.
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Intel and AMD are a duopoly that produces CPU chips. Intel and AMD can conduct R&D or they cannot conduct R&D. The table above shows the payoff matrix for the two firms
If AMD is playing a tit-for-tat strategy, then if Intel conducted R&D last period, AMD A) definitely conducts R&D this period. B) definitely does not conduct R&D this period. C) might conduct R&D or might not conduct R&D, depending on Intel's profit. D) might conduct R&D or might not conduct R&D, depending on its profit. E) might conduct R&D or might not conduct R&D, but more information is needed to determine its action.
Refer to Table 4-6. The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion. The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units. What is the value of producer surplus?
A) $600 thousand B) $300 thousand C) $150 thousand D) $30 thousand