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Ierofanga [76]
3 years ago
14

The 1970s saw a period of high inflation in many industrialized countries including the united states. due to the increase in th

e rate of​ inflation, lenders, including credit card​ companies, revised their nominal interest rates upward. how is the rate of inflation related to the nominal interest rate that credit card companies​ charge, and why would lenders need to increase the nominal interest rate when the inflation rate​ increases?
a. the nominal rate of interest is the real rate of interest plus the rate of​ inflation; lenders need to raise the nominal rate when inflation increases to stabilize credit market activity.
b. the nominal rate of interest is the real rate of interest plus the rate of​ inflation; lenders need to raise the nominal rate when inflation increases to maintain their desired real return.
c. the nominal rate of interest and the inflation rate are inversely​ related; lenders need to raise the nominal rate when inflation increases to satisfy government regulations on lending practices.
d. the nominal rate of interest is the real rate of interest less the rate of​ inflation; lenders need to raise the nomin
Business
1 answer:
Anna [14]3 years ago
8 0

Answer : b. the nominal rate of interest is the real rate of interest plus the rate of​ inflation; lenders need to raise the nominal rate when inflation increases to maintain their desired real return.

Explanation: Nominal rate = real rate + inflation . Suppose they had an real return of 4% when the inflation was 1% and they charged at credit card rate at 5%. Now if the inflation increases to 2%, the cannot continue to charge 5% since in that case their real return would only be 3%. Hence they will now have to charge 6% to still get their original real rate of 4%

You might be interested in
Rodriquez Company budgeted the following sales in units: January 30,000 February 20,000 March 40,000 Rodriquez's policy is to ha
chubhunter [2.5K]

Answer:

24,000 units

Explanation:

Given:

Budgeted sales for January = 30,000

Budgeted sales for February = 20,000

Opening inventory in January = 7,500

Desired ending inventory = 20% of sales in February

                                        = 0.2 × 20,000

                                        = 4,000 units

Units required in January = 30,000 + 4,000

                                        = 34,000 units

Units to be produced in January = 34,000 - opening inventory

                                                   = 34,000 - 7,500

                                                   = 26,500 units

Budgeted sales for February = 20,000

Budgeted sales for March = 40,000

Opening inventory in February is closing inventory of January = 4,000

Desired ending inventory = 20% of sales in March

                                        = 0.2 × 40,000

                                        = 8,000 units

Units required in February = 20,000 + 8,000

                                        = 28,000 units

Units to be produced in February = 28,000 - opening inventory

                                                         = 28,000 - 4,000

                                                         = 24,000 units

5 0
3 years ago
A negative externality occurs when Question 16 options: the private marginal costs are equal to the social marginal costs. the p
lana66690 [7]

When a negative externality exists, the marginal social cost is always higher than the marginal private cost. So, the correct answer is option A the private marginal costs are less than social marginal costs.

<h3><u>What is a negative externality?</u></h3>

When the manufacturing process has a negative impact on unconnected third parties, this is referred to as a negative production externality. For instance, manufacturing facilities contribute to noise and air pollution throughout the production process.

<h3><u>What happens when a negative externality exists?</u></h3>

The marginal social cost and the marginal private cost are no longer equal when a market has negative production externalities. As a result, the supply curve (which indicates the marginal private cost) does not accurately reflect the marginal societal cost and the social cost is instead larger due to the externality's per-unit cost.

You can learn more about negative externality using the following link:

brainly.com/question/13901028

#SPJ4

7 0
1 year ago
Sally would only agree to a second date with Andy if she sees him leave a generous tip for the waiter on their first dinner date
Nikitich [7]

Answer:

The correct answer is letter "A": Screening mechanism.

Explanation:

The screening mechanism is the activity in which people identify good qualities in others by evaluating their actions and matching them with their own behavior so they can eventually qualify those other people as suitable for them or not.

In the example, <em>Sally must consider a good practice to give generous tips to waiters since only if Andy, her date, does such a thing, she will consider dating him again. What Sally conducted is an example of a screening mechanism.</em>

5 0
3 years ago
obinson Company had a net deferred tax liability of $34,000 at the beginning of the year, representing a net taxable temporary d
ZanzabumX [31]

Answer:

Robinson's deferred income tax expense or benefit for the current year would be $6,700

Explanation:

The computation of the deferred income tax expense or benefit for the current year is shown below:

= Deferred tax expense - adjustment of tax based on the tax rate

where,

Deferred tax expense = (Favorable temporary differences - unfavorable temporary differences) × corporate tax rate

= ($50,000 - $20,000) × 21%

= $6,300

And, the adjustment of tax equals to

= Net taxable temporary difference × (Tax rate - corporate tax rate)

= $100,000 × (34% - 21%)

= $13,000

Now put these values to the above formula  

So, the value would equal to

= $6,300 - $13,000

= $6,700

6 0
2 years ago
One of the workers in Henry's department submitted his two weeks' notice so Henry needs to hire a replacement. The HR department
cupoosta [38]

Answer:

procedure

Explanation:

According to my research on different human resource responsibilities, I can say that based on the information provided within the question there is a procedure that Henry must follow. Like described in the question a Procedure is a set of step by step instructions that must be followed accordingly in order to achieve a certain goal.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

3 0
2 years ago
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