The inflation rate has been 4 percent for 10 years, and the nominal interest rate has been 8 percent during this same time period. Suddenly, the public anticipates that the inflation rate will be 8 percent this coming year. The real rate of interest for the coming year is
A) 0 percent.
B) 2 percent.
C) 4 percent.
D) 6 percent.
Correct Answer:
Verified
Q324: The real rate of interest is
A) the
Q327: For most people, the problems of inflation
Q330: The real rate of interest is
A) the
Q331: Unanticipated inflation occurs when
A) everyone knows perfectly
Q333: The real rate of interest equals 5%
Q334: A clause in a contract that automatically
Q335: The real rate of interest equals 8%,
Q335: Unanticipated positive inflation
A) hurts everyone.
B) hurts creditors.
C)
Q340: An unexpected reduction in inflation would tend
Q355: Empirical evidence shows that the nominal interest
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