If inflation this year is higher than expected, then
both lenders and borrowers will gain and the government will lose
borrowers will gain at the expense of lenders
both lenders and borrowers will lose
lenders will gain at the expense of borrowers |
the government will lose unless it has implemented an indexed tax system
If inflation this year is higher than expected, then borrowers will gain at the expense of lenders
Real interest rate = Nominal interest - inflation
When inflation is higher, then Real interest rate is lower, therefore borrowers will gain
The second option is correct answer
If inflation this year is higher than expected, then both lenders and borrowers will gain and...
True False Answer Bank Borrowers gain when inflation is higher than expected. Loan contracts specify the nominal interest rate. Real interest rates will never go negative. If inflation is higher than the nominal interest rate, the real interest rate is negative. Borrowers lose when inflation is higher than expected.
Determine if each statement is true or false. True False Answer Bank Borrowers gain when inflation is lower than expected, If inflation is higher than the nominal interest rate, the real interest rate is negative Loan contracts specify the nominal interest rate, Real interest rates will never go negative. Lenders gain when inflation is lower than expected,
Suppose that the inflation rate turns out to be much higher than most people expected. In that case, O A. both borrower and lender will gain from the situation. O B. a borrower will gain from the situation while a lender will lose. O C. a lender will gain from the situation while a borrower will lose. D. both borrower and lender will lose in this situation
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8. Suppose real interest rate r-4% and expected inflation rate for the following year En 4%. (a) What is the nominal interest rate? (2 points) (b) What is the ex ante real interest rate? (2 points) Suppose the actual inflation rate at the end of the following year π turned out to be 6%. (c) What is the ex post real interest rate? (3 points) (d) Borrowers (gain/oseand lende and lenders (gain/lose) (4...
Winner/Loser options are: Lenders or
Borrowers.
15. Menu Costs and Winners and Losers from Inflation Aa Aa Assume the following table gives the inflation rates in the year 2009 and average inflation rates over the period 2010-2017 for four different countries Average Inflation Rate in 2010-2017 (%) 6.70 0.25 18.51 2.40 Difference between Actual and Expected Inflation Rates (%) Inflation Rate in 2009 (%) 7.06 -0.78 55.03 3.37 Winners or Losers from Inflation Country Given the expected relationship between average...
Loans made between borrowers and lenders are 1 Multiple Choice 84 nts liabilities to the lenders and assets to the borrowers since the borrower obtains the funds. assets to the lenders and liabilities of the borrowers since the promises are made to the lenders. not part of either parties' assets or liabilities until the loans are repaid liabilities to both the lenders and the borrowers. Financial intermediaries 2 Multiple Choice 2.94 points O can be banks, but not all financial...
If market considers that Mexico expected inflation rate next year is 3% higher than expected US inflation rate what would be the impact on relative interest rates in the two countries? Is it going to impact the interest rates now or next year?
Suppose that currently nominal interest rates, inflation, and expected inflation are all 2% right now. a) Suppose the Federal Reserve increases interest rates in the economy. Draw a well labeled supply and demand diagram that shows how they typically would do that and how it affects the supply & demand in the money market and bond market. b) Suppose that when the Federal Reserve takes this action and expected inflation decreases from 2% to 1%. Show the effect of this...
I will be higher than with the w expected ay SAMSUNG Ch. 1: W ation and the Quantity Theory of Money Suppose real GDP is forecasted to grow by 2.33%, the velocity of money has been stable, and the Fed announces an inflation target of 3.106. What is the largest money growth rate the Fed could implement and still achieve its inflation target? Now suppose there is a mid-year revision of the GDP forecast that lowers the expected growth rate...
Suppose that currently nominal interest rates, inflation, and expected inflation are all 2% right now Suppose the Federal Reserve increases interest rates in the economy. Draw a well labeled supply and demand diagram that shows how they typically would do that and how it affects the supply & demand in the money market and bond market. Suppose that when the Federal Reserve takes this action and expected inflation decreases from 2% to 1%. Show the effect of this change in...