assume that there is a fixed rate of interest on contracts for borrowers and lenders. if unexpected inflation occurs in the economy, then
Ans) Lenders are hurt, but borrowers benefit.
if unexpected inflation occurs in the economy, then Lenders are hurt, but borrowers benefit.
assume that there is a fixed rate of interest on contracts for borrowers and lenders. if...
When interest rates increase this is: a. Bad for lenders and borrowers (incorrect) b. Good for lenders but bad for borrowers c. Good for borrowers but bad for lenders d. Good for lenders and borrowers
The contract rate of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level. True or False True False
d) recessions result from declines in long-run aggregate supply, rather than decreases in aggregate demand. Question 19 (8 points) Suppose the economy has a population of 25 million people and a labor force participation rate of 50%. Furthermore, suppose the natural rate of unemployment in the economy is 8%. If the current number of unemployed people is 5 million people, what is the rate of cyclical unemployment rate? Answer: % Your Answer: Answer Question 20 (4 points) Saved Assume that...
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...
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
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,
Financial intermediation is the process of: settling disputes between borrowers and lenders. advising corporations how to invest. transferring funds from savers to borrowers. converting from a barter economy to a money economy.
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.
Evaluate the following statement: "A higher interest rate will cause the borrowers to increase their borrowings and will cause lenders to increase their lending." Ideal answer is one paragraph long and includes the necessary graphs.