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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 aftertax nominal rate is (1 ñ 25%) • 12% = 9%.
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The formula given was: (real rate of interest) = (nominal rate of interest)  (expected rate of inflation) A chartered bank offers a oneyear loan at "3 points above prime." Prime is 4 per cent. a) What is the nominal interest
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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? b)What is the growth
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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
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True or false; 1.Lenders gain when inflation is higher than expected. 2. Lenders lose when inflation is higher than expected 3. real interest rates will never go negative 4. loan contracts specify the nominal interest rate. 5. if
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True or false; 1.Lenders gain when inflation is higher than expected. 2. Lenders lose when inflation is higher than expected 3. real interest rates will never go negative 4. loan contracts specify the nominal interest rate. 5. if
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For a given nominal interest rate, an unexpectedly low inflation rate ______ the real interest rate. a. increases b. decreases c. has no impact on d. may either increase or decrease e. is subtracted from
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If the rate of inflation is 5%, what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment?
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If the rate of inflation is 5%, what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment?
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