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please print out words show the answer,thanks! 8. Suppose real interest rate r-4% and expected inflation...
Suppose the nominal interest rate equals 9%, the expected inflation rate is 5%, and actual inflation turns out to be 3%. In this case, the: a. ex ante real interest rate is 4%. b. ex post real interest rate is 4%. C. ex ante real interest rate is 6%. d. ex post real interest rate is 2%
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b. What are the reasons for very high nominal interest rates in the 1980s? c. Explain ex-ante real rate and ex-post real rate.
4. Ex post versus ex ante inflation rates Complete the following table by calculating the ex post and ex ante real interest rates. Interest Rate Value 9.5% Nominal interest rate Actual inflation rate Expected inflation rate 8.2% 11% Ex post real interest rate Ex ante real interest rate Based on the table, the real realized rate of return is %.
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9. Suppose you are a lender and have a real interest rate in mind of 5% (or in other words, your required after- inflation rate of retum from making a loan is 5%) and you expect inflation to be 1% over the coming year. Use the approximate Fisher equation to answer this a. What nominal or market interest rate will you charge? Show your calculations en re b. Suppose you lend money at the interest...
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37) If the expected inflation rate was 2.5%, the expected real interest rate was 4.0%, and the real interest rate turned out to be 5.1%, then the nominal interest rate equals A) 1.4%. B) 1.5%. C) 2.6%. D) 6.5%.
Macroeconomic Canadian education
Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the Real Interest Rate In this exercise, we see why the real cost of borrowing is equal to the real interest rate. 5. Since a borrower's actual dollar payments are based on the nominal interest a. rate, it is sometimes difmicult to see why the real cost of borrowing is equal to the real interest rate. Consider a family that buys a new house for...
Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal interest rate?nominal interest rate: = _______ %All else equal, if inflation decreases by 0 %, what will happen to the nominal interest rate?The real interest rate will decrease by 0 %.The nominal interest rate will decrease by 0 %.The nominal interest rate will increase by 0 %.The real interest rate will increase by 0 %.What do economists call the relationship between the nominal interest...
Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal interest rate? nominal interest rate:
Given the following 4 scenarios: The contract interest rate was 3.5% and the expected inflation rate was 1.5%. The contract interest rate was 5% and the expected inflation rate was 2%. The contract interest rate was 7.5% and the expected inflation rate was 4%. The contract interest rate was 9% and the expected inflation rate was 5%. and an ex post actual inflation rate of 4.75%, answer both of the following questions. a) Indicate which scenario was expected to be...
If a lender charge a 9% nominal interest rate and expected inflation rate is a 4%, what is the difference between the real rate the lender received and the real rate the lender expected when the actual inflation ended up being 2%