posted by .

The annual nominal rate of interest on a bank certificate of deposit is 12%. What would be the effect of an inflation rate of 13% and why?

  • Macroeconomics -

    Why are you taking such an out-of-date class? Most CDs are paying less than 1% per year.

  • Macroeconomics -

    idk. it's just a homework question to see if we understand the subject i guess.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Economics

    If the velocity of circulation is constant, real GDP is growing at 3 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 7 percent a year. a)What is the inflation rate?
  2. pre algerbra

    susan bought a 6 month $1,700 certificate of deposit.At the end of six months she received $63 simple interest. what annual rate of interest did the certificate pay?
  3. algebra interest word problem

    Erin Grabish recevied $2,000 for speaking at a financial planning seminar. Erin invested the money in a certificate of deposit for 2 years. When she redeemed the certificate of deposit, she received $2166. What simple interest rate …
  4. Macroeconomics

    You read in a newspaper that the nominal interest rate is 12 percent per year in Canada and 8 percent per year in the United States. Suppose that the real interest rates are equalized in the two countries and that purchasing-power …
  5. international economic

    2.) This question uses the general monetary model, in which L is no longer assumed constant and money demand is inversely related to the nominal interest rate. Consider the same scenario described in the beginning of the previous question. …
  6. economics

    Suppose Caroline is a cinephile and buys only movie tickets. Caroline deposits $3000 in a bank acct that pays an annual interest rate of 20%. You can assume that this interest rate is fixed-that is, it won’t change over time. At …
  7. math

    Please someone show me how to work this one out?
  8. Economics

    The formula given was: (real rate of interest) = (nominal rate of interest) - (expected rate of inflation) A chartered bank offers a one-year loan at "3 points above prime." Prime is 4 per cent. a) What is the nominal interest rate?
  9. AP Macroeconomics

    3. You buy a certificate of deposit (CD) that pays a nominal rate of 12% annually. You have a tax rate of 25%, so if the interest on this CD is taxable (which it may not be) your after-tax nominal rate is (1 ñ 25%) • 12% = 9%. Since …
  10. Math

    Gabe placed $2000 in a certificate of deposit. He earned $10 in interest each month for the next 36 months. Find the annual simple interest rate for his certificate of deposit.

More Similar Questions