If inflation is -10% (that is, deflation), then it is reasonable to expect: Select one: a....
If inflation is -10% (that is, deflation), then it is reasonable to expect:
Select one:
a. the real interest rate to be less than 10%
b. the real interest rate to be at least 10%
c. the real interest rate to be zero
d. the nominal interest rate to be -10%
Homework Answers
Answer:
a. the real interest rate to be less than 10%
Reason:
real interest rates falls as inflation increases.
Add Answer to:
If inflation is -10% (that is, deflation), then it is reasonable
to expect:
Select one:
a....
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...
24. A reduction in therate of inflation is called: a. Deflation b. Disinflation c. Hyperinflation d....
24. A reduction in therate of inflation is called: a. Deflation b. Disinflation c. Hyperinflation d. Cost-push inflation. 25. Suppose your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, then your real income was a. Increased by 1.67 percent b. Increased by 2 percent. c. Increased by 8 percent. d. Decreased by 0.6 percent.
home poup poda 7. Define the following terms: a) Inflation. b) Disinlation- c) Deflation- d) Consumer...
home poup poda 7. Define the following terms: a) Inflation. b) Disinlation- c) Deflation- d) Consumer Price Index (CPI)- 8. List and explain the three types of inflation" Which is the WORST TYPE? WHY? 1. 2. 3. 9. Core Inflation excludes: 10, GIVEN: Nominal Income-S 400 Billion, CPI = 125 % Wo 11, GIVEN: Real Interest Rate-4 %, Inflation Premium-5 % Calculate the Nominal Interest Rate a bank should charge a borrower Show All Work! 12. Who is hurt by...
An increase in Consumption would cause which of the following? Cost-Push inflation declining Real GDP deflation...
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Question 5 1 pts Investors expect deflation to occur (i.e., you expect a negative rate of...
Question 5 1 pts Investors expect deflation to occur (i.e., you expect a negative rate of inflation also called deflation). Holding all other inputs constant, which of the following statements is/are true given that expectation? The slope of the security market line (SML) will increase. The slope of the security market line (SML) will decrease. O The expected returns on all securities will increase. The expected returns on all securities will decrease. O More than one of the above will...
Which of these statements is NOT correct? A. If deflation occurs, you will receive a “real”...
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There is a persistent fear that there will be a high level of deflation. Many economists...
There is a persistent fear that there will be a high level of deflation. Many economists warn that it may be worse for the economy than if there is high inflation. Suppose that Herb is in debt and has to pay a 4.50% nominal interest rate. He expected inflation to be 1.00%. Instead, inflation is-2.00% (deflation). What is the real interest rate that Herb expected to pay? Round your answer to two decimal places What is the real interest rate...
If you lend money at a 12% nominal interest rate, but you expect inflation to be...
If you lend money at a 12% nominal interest rate, but you expect inflation to be 7% over the life of the loan, then you expect your purchasing power to grow at a rate of [1%. The real interest rate is negative when the nominal interest rate is If the nominal interest rate is 3% and the expected rate of inflation is 1%, then the real interest rate is ▼| the inflation rate. A. 2%. O B. 096. 3%. 1%....
10 H ) Policy makers have changed their focus from keeping inflation from getting too high...
10 H ) Policy makers have changed their focus from keeping inflation from getting too high to keeping inflation from getting too low because historically there has been asset deflation and now there is asset inflation. during the financial crisis of 2008 there was asset deflation which can lead to overall deflation. technology has changed the structural economy so much that asset inflation is no longer a concern. during the financial crisis of 2008 there was asset deflation which can...
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V....
9) Which of the following imply a deflation? I. persistently increasing CPI III. positive CPI V. persistently lower inflation rate IL. persistently decreasing CPI IV, negative CPI VI. negative inflation rate C) II, IV and VI 10) The quantity theory of money argues that, in the long run (when RGDP stays constant), the percentage change in money will create an equal percentage change in A) velocity B) real GDP C) inflation rate. D) the price level. 11) If velocity is...
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...
24. A reduction in therate of inflation is called: a. Deflation b. Disinflation c. Hyperinflation d. Cost-push inflation. 25. Suppose your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, then your real income was a. Increased by 1.67 percent b. Increased by 2 percent. c. Increased by 8 percent. d. Decreased by 0.6 percent.
home poup poda 7. Define the following terms: a) Inflation. b) Disinlation- c) Deflation- d) Consumer Price Index (CPI)- 8. List and explain the three types of inflation" Which is the WORST TYPE? WHY? 1. 2. 3. 9. Core Inflation excludes: 10, GIVEN: Nominal Income-S 400 Billion, CPI = 125 % Wo 11, GIVEN: Real Interest Rate-4 %, Inflation Premium-5 % Calculate the Nominal Interest Rate a bank should charge a borrower Show All Work! 12. Who is hurt by...
Question 5 1 pts Investors expect deflation to occur (i.e., you expect a negative rate of inflation also called deflation). Holding all other inputs constant, which of the following statements is/are true given that expectation? The slope of the security market line (SML) will increase. The slope of the security market line (SML) will decrease. O The expected returns on all securities will increase. The expected returns on all securities will decrease. O More than one of the above will...
There is a persistent fear that there will be a high level of deflation. Many economists warn that it may be worse for the economy than if there is high inflation. Suppose that Herb is in debt and has to pay a 4.50% nominal interest rate. He expected inflation to be 1.00%. Instead, inflation is-2.00% (deflation). What is the real interest rate that Herb expected to pay? Round your answer to two decimal places What is the real interest rate...
If you lend money at a 12% nominal interest rate, but you expect inflation to be 7% over the life of the loan, then you expect your purchasing power to grow at a rate of [1%. The real interest rate is negative when the nominal interest rate is If the nominal interest rate is 3% and the expected rate of inflation is 1%, then the real interest rate is ▼| the inflation rate. A. 2%. O B. 096. 3%. 1%....
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