Federal reserve notes are the marks on money like the serial number, U.S emblems, and the signatures. They show that the money is an American Dollar.
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.
Answer:
Higher prices with same sales quantity will mean greater profit.
Explanation:
Let's hold some variables constant. If a business sells books, and they take the prices up, if they sell the same quantity (at higher prices) this would increase revenues. Higher revenues, less the same cost structure (variable and fixed costs) will lead to a greater profit generation. Of course in the real world, price elasticity of demand comes in play when prices are changed. If prices go up, typically sales quantity will decrease and there may be a net effect in revenue and hence profit. In the simple case where prices go up and sales quantity is unaffected, net profit will rise.
