Answer:
Correct option is C.
Step wise solution is given below for demonstration.
Answer:
Habit Loop
Explanation:
Habit Loop -
It is a type of loop , which runs in the brain of the human being , and functions to govern the habit , is referred to as habit loop .
The habit loop has three components , i.e. , reward , routine , and cue .
The proper knowledge of these components enables the person to have command of their habits and can easily remove the bad habits and inculcate the good ones .
Hence , from the given scenario of the question,
The correct term is habit loop .
Answer:
The real risk free rate is 3.8%
The exact risk-free rate is 3.68%
Explanation:
The interest rate on the Treasury bills is usually a combination of real risk free rate and inflation rate to compensate investors for average inflation in the economy during the instrument lifetime which equals nominal risk-free rate.
nominal risk-free rate = real risk-free rate+inflation rate
nominal risk-free rate=7%
inflation rate=3.2%
real risk-free rate=7%-3.2%
real risk-free rate=3.8%
The exact real risk-free rate can be computed thus:
nominal rate+1=(real risk-free rate+1)*(inflation rate+1)
real risk-free rate=(nominal rate+1)/(inflation rate+1)-1
real risk free rate=(1.07/1.032)-1
real risk-free rate=0.036821705
real risk-free rate=3.68%
The corridor is the vertical section of the supply curve of reserves in the federal fund market.
Answer:
Nominal interest rate (n) = 10% = 0.10
Inflation rate (i) = -2% = -0.02
Real interest rate (r) = ?
Application of Fisher's Equation
(I + n) = (1 + r)(1 + i)
(1 + 0.10) = (1 + r)(1 + -0.02)
1.10 = (1 + r)(0.98)
<u>1.10</u> = 1 + r
0.98
1.1224 = 1 + r
1.1224 - 1 = r
r = 0.1224 = 12.24%
Jimmer's real income will change by 12.24% next year.
Explanation:
In the determination of the rate of change in real income, there is need to apply Fisher's equation. The nominal rate and inflation rate have been given, thus, we will make the real rate the subject of the formula.
