Katarina puts money into an account. One year later she sees that she has 6 percent...
Katarina puts money into an account. One year later she sees that she has 6 percent more dollars and that her money will buy 4 percent more goods.
a. The nominal interest rate was 6 percent and the inflation rate was 2 percent.
b. The nominal interest rate was 10 percent and the inflation rate was 6 percent.
c. The nominal interest rate was 4 percent and the inflation rate was 2 percent.
d.The nominal interest rate was 10 percent and the inflation rate was 4 percent.
Homework Answers
If the money will buy 4% more than before then the real interest rate is 4%. the inflation is the market is 2% and the nominal rate is 6%.
The answer is "A", The nominal interest rate was 6 percent and the inflation rate was 2 percent.
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