1) If the nominal price of interest is 2 percent, and also the intended inflation price is -10 percent, the real rate of interest is

A) 2 percent.

You are watching: In which of the following situations would you prefer to be the borrower?

B) 8 percent.

C) 10 percent.

D) 12 percent.

2) In i beg your pardon of the following cases would you prefer to it is in the lender?

A) The interest price is 9 percent and the intended inflation price is 7 percent.

B) The interest price is 4 percent and also the supposed inflation rate is 1 percent.

C) The interest rate is 13 percent and also the expected inflation price is 15 percent.

D) The interest rate is 25 percent and also the expected inflation price is 50 percent.

january 16 2021 02:13 pm

1 approved Answer


ABHISHEK K answer on January 18, 2021
5 Ratings, (16 Votes)

(1) Calculating the real price of interest. 

The nominal interest rate refers come the price of interest before adjusting because that inflation. It likewise refers come the rate specified in the loan contract without adjusting because that compounding. The nominal...
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