An optimizing economic agent will use the ________ rate when calculating the economic cost of a loan.

Question

Quizplus · Accepted Answer

An optimizing economic agent takes into account the inflation rate when calculating the economic cost of a loan. The real interest rate adjusts for inflation and represents the true cost of borrowing or the return on an investment. The nominal interest rate does not take inflation into account and simply represents the rate at which money is borrowed or lent.

An Optimizing Economic Agent Will Use the ________ Rate When