The nominal interest rate is the 1)rate of interest charged to most large commercial borrowers. 2)the...
The nominal interest rate is the
1)rate of interest charged to most large commercial borrowers.
2)the rate charged on loans for automobiles and other personal loans but not the rate charged on home loans. 3)equal to the real interest rate minus the inflation rate.
4)the interest rate that is corrected for inflation.
5)the interest rate that is not corrected for inflation.
Homework Answers
Answer: 5) the interest rate that is not corrected for inflation.
Nominal interest rate is the exact interest rate as stated in bonds or investment.
Nominal interest rate = Real interest rate + Inflation rate
To avoid purchasing power erosion through inflation, investors consider the real interest rate, rather than the nominal rate. Because nominal interest rate is the interest rates that have not been adjusted for inflation and real interest rate is the one that has been adjusted for inflation.
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The nominal interest rate is the
1)rate of interest charged to most large commercial
borrowers.
2)the...
The real interest rate A. is equal to the nominal interest rate minus the inflation rate.
The real interest rate A. is equal to the nominal interest rate minus the inflation rate. B. is the interest rate that adjusts GDP for changes in prices. C. is equal to the inflation rate minus the nominal interest rate. D. is the interest rate that is quoted on a financial debt and a firm's assets.
Agree or disagree? 75 word reply A nominal interest rate measures the change in dollar amounts....
Agree or disagree? 75 word reply A nominal interest rate measures the change in dollar amounts. It is quoted on bonds and loans. Nominal interest rate is simple; for example, if you borrow $1000 at a 5% interest rate, you can expect to pay $50 in interest without taking inflation into account. The con of using the nominal interest rate is the fact that it does not adjust for the inflation rate. Whereas a real interest rate does take inflation...
In words, the real rate of interest is approximately equal to 0 the nominal rate minus...
In words, the real rate of interest is approximately equal to 0 the nominal rate minus the inflation rate. O the inflation rate divided by the nominal rate. O the nominal rate plus the inflation rate. O the nominal rate times the inflation rate. O the inflation rate minus the nominal rate.
The nominal interest rate is the: same as the real interest rate. rate of interest that...
The nominal interest rate is the: same as the real interest rate. rate of interest that investors pay to borrow money. rate of inflation minus the real rate of interest. real rate of interest minus the rate of inflation.
22. Under which of the following assumptions would the nominal interest rate be equal to the...
22. Under which of the following assumptions would the nominal interest rate be equal to the real interest rate? (a) expected inflation is equal to the nominal interest rate (b) expected inflation is equal to the real interest rate (c) expected inflation is negative (d) expected inflation is equal to zero (e) none of the above 23. If the nominal interest rate is less than the real interest rate, we know that (a) both the nominal or real interest rate...
U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theor...
U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theory, investors will move their funds from U.S. to Canada because they earn a better interest rate, therefore, demand for Canadian $ will increase, so Canadian $ will appreciate, and $ will depreciate. According to the fishier effect, real interest rate is assumed to usually be in equilibrium. So, Nominal Interest Rate = Real Interest Rate + Expected Inflation U.S. 4% = 3% + 1%...
In which case would people desire to borrow the most? be the nominal interest rate is...
In which case would people desire to borrow the most? be the nominal interest rate is 8% and the inflation rate is 7% the nominal interest rate is 7% and the inflation rate is 5% the nominal interest rate is 6% and the inflation rate is 3% the nominal interest rate is 5% and the inflation rate is 1%
Given the nominal interest rate of 18% and the expected inflation of 15% then the value...
Given the nominal interest rate of 18% and the expected inflation of 15% then the value of the real interest rate %. With the real interest rate equal to 3% and the expected flat on equal to 4%, then the value of the nominal interest rate is A lender prefers a real interest rate while a borrower prefers a % real interest rate
The nominal interest rate is 12%. The inflation rate is 3%. The real interest rate is...
The nominal interest rate is 12%. The inflation rate is 3%. The real interest rate is equal to %.
If the nominal interest rate is 2% and the real interest rate is 1%, inflation is:...
If the nominal interest rate is 2% and the real interest rate is 1%, inflation is:A. -1 %.B. 0 %C. 1 %.D. 2 %.
In words, the real rate of interest is approximately equal to 0 the nominal rate minus the inflation rate. O the inflation rate divided by the nominal rate. O the nominal rate plus the inflation rate. O the nominal rate times the inflation rate. O the inflation rate minus the nominal rate.
22. Under which of the following assumptions would the nominal interest rate be equal to the real interest rate? (a) expected inflation is equal to the nominal interest rate (b) expected inflation is equal to the real interest rate (c) expected inflation is negative (d) expected inflation is equal to zero (e) none of the above 23. If the nominal interest rate is less than the real interest rate, we know that (a) both the nominal or real interest rate...
In which case would people desire to borrow the most? be the nominal interest rate is 8% and the inflation rate is 7% the nominal interest rate is 7% and the inflation rate is 5% the nominal interest rate is 6% and the inflation rate is 3% the nominal interest rate is 5% and the inflation rate is 1%
Given the nominal interest rate of 18% and the expected inflation of 15% then the value of the real interest rate %. With the real interest rate equal to 3% and the expected flat on equal to 4%, then the value of the nominal interest rate is A lender prefers a real interest rate while a borrower prefers a % real interest rate
The nominal interest rate is 12%. The inflation rate is 3%. The real interest rate is equal to %.
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