A business borrows from a bank at 7 percent but expects 3 percent general inflation in the economy. What are the nominal and real rates of interest facing this borrower?
What will be an ideal response?
The borrower's nominal interest rate is 7 percent and the real interest rate is 4 percent.
Economics
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Continuing from the question above, an additional 10 people join the group who have expected medical spending of $5,000 per person on average. The new premium will be approximately
a. $1,500 b. $2,200 c. $2,500 d. $4,500
Economics
When the government taxes labor earnings we can expect people to
a. work more so they can keep the same standard of living. b. work less and enjoy more leisure. c. quit their present job and find one that pays better. d. stop working altogether and go on welfare.
Economics