Suppose you lend $5000 to your brother for one year at a nominal interest rate of 7%.Inflation during that year is 4%.As a result,you will receive ________ at the end of the year.

Question

Quizplus · Accepted Answer

The nominal interest rate is 7%, so the interest earned on $5000 is $5000 * 0.07 = $350. Therefore, the total amount received at the end of the year is $5000 + $350 = $5350.

Suppose You Lend $5000 to Your Brother for One Year