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garri49 [273]
2 years ago
7

Economic activity in developing countries is limited at least in part due to limited investment. Investment is limited mostly du

e to insufficient lending. Lending is mostly limited due to economic uncertainty and the prospect of unexpected inflation.
In light of this, please describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan.
How would a variable-interest-rate loan (one that adjusts over the contract period) eliminate these losses?
Business
1 answer:
Tpy6a [65]2 years ago
4 0

Inflation is the economic condition in which the interest rate keeps increasing which is beneficial for the lenders. But not a fixed rate lender.

<h3 /><h3>What is Interest Rate?</h3>

Interest rate is the prevailing market rate which the lender of the money gets in return for the money provided as a loan.

If there is a fixed interest contract the lender will get the same percentage of return for the duration of contract, no matter the fluctuation of the interest rate in the market. This is not beneficial when the economy is facing inflation. As whatever be the rate in the market (definitely higher) the lender will get the same percentage of return.

However if there is a variable rate contract the rate is updated and the lender is paid at the updated interest rate. This is beneficial when the economy is facing inflation.

Learn more about interest rates at brainly.com/question/28142837

#SPJ1

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6 0
3 years ago
Involuntary unemployment occurs when the wage rate is below the equilibrium wage rate. exists when there is an excess quantity o
Natali5045456 [20]

Answer:

exists when there is an excess quantity of labor supplied.

Explanation:

Involuntary unemployment is the situtation in which the labor actually work and also work at the prescribed wage rate in that time when the job is not getting

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3 0
2 years ago
Shannon signs a contract with tevin, an unlicensed contractor, to build a deck and gazebo at the rear of her house. this contrac
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The answer is noone.

8 0
3 years ago
As applied to mortgage loans, which of the following statements is FALSE? By increasing the number of payments per year you incr
Ann [662]

Answer:

The statement that is false about mortgage loans is Advertised rates are annual percentage rates.

Explanation:

Mortgage loan refers to a loan that uses real estate as collateral to receive cash upfront to be redeemed after the loan repayment is completed. if the loan is not remitted as at when due , the lender lays claim to the real estate property.

By increasing the number of payments per year you increase your effective borrowing rate.

When you use a spreadsheet to calculate your interest rates, it uses the periodic interest rate, not the annual percentage rate.

You can find a monthly payment by dividing the annual payment by 12.

However, advertised interest rate are not the same as your loan's annual percentage rate (APR) because other charges like mortgage insurance, closing costs, discount points and loan origination fees apply.

5 0
3 years ago
Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the f
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Answer:

B. One year from now, Stock X's price is expected to be higher than Stock Y's price.

Explanation:

Hope it helped...Please mark brainliest. Have a nice day!

7 0
3 years ago
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