1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mart [117]
3 years ago
9

Consider the following five situations. In which situation would a borrower be best off and in which situation would a lender be

best​ off? a. The nominal interest rate is 14 percent and the inflation rate is 17 percent. b. The nominal interest rate is 9 percent and the inflation rate is 5 percent. c. The nominal interest rate is 4 percent and the inflation rate is negative 2 percent. d. The real interest rate is 8 percent and the inflation rate is 3 percent. e. The real interest rate is 3 percent and the inflation rate is 9 percent. The borrower is best off in situation ▼ and the lender is best off in situation ▼ A B C D E .
Business
1 answer:
umka2103 [35]3 years ago
5 0

Answer:

The borrower is best off in situation <u>"a"</u> and the lender is best off in situation ▼  "C" .

Explanation:

Considering all the situations given in the options, the <u>borrower</u> is best in situation <u>a</u> and <u>lender</u> is best off in situation in <u>c</u>.

<u>Part a </u>

Real Interest rate = Nominal Interest rate - Inflation rate = 14 - 17 = -3 per cent. Thus, the purchasing power of money has fallen and the person has to pay back money with little purchasing power as compared to the value of the purchasing power at the time he borrowed money. Thus, borrowers are best off.Thus, <u>borrower</u> is best off when the inflation rate is very high.

<u>Part c</u>

Inflation rate is negative, thus the purchasing power of money will increase and lenders will get back money with higher purchasing power as compared to the value of the purchasing power of money at the time he lend the money. Thus, <u>lender </u>is best off when inflation rate is lowest.

You might be interested in
Kin based societies, headed by hereditary leaders or priests with the powers such as ceremonial and labor organization, land use
ollegr [7]

Answer:

Chiefdoms

Explanation:

Kin based societies, headed by hereditary leaders or priests with the powers such as ceremonial and labor organization, land use supervision, and resource distribution are known as Chiefdoms

Chiefdoms are forms of hereditary political organization that is usually based on kinship, in which power is left in the hands of the most senior members of the royal family or selected ruling families. They also exercise economic powers of resource distribution.

3 0
3 years ago
What is the difference in having da juice, or having the sauce?
Goryan [66]
Juice is good but i don’t even care what the flavor of it so it was a nice touch it fr sauce poop
6 0
3 years ago
It takes a total of 475 seconds for one technician to assemble one airrules smart phone, working alone. however, airrules manufa
maks197457 [2]
<span>Normally if one tecnician takes 475 seconds to assemble one air rule smartphone. Then it would take. 20 technicians X secs to do the same So It would take 20 tecnicians X secs = (20 * 475) / 1 = 9500 secs. I. e it takes 20 technicians 9500 secs to manufacture a smartphone. But airrules uses 20 technicians to manufacture the same phone in only 30 secs. So its efficiency would be: Number of secs it takes the 20 techician to manufacture the phone * efficiency = Normal of hours it would usually take 20 techician to manufacture the phone. So we have 30 * X = 9500 X = 9500/30 = 316.777. So they are 316.667 times as efficient.</span>
6 0
3 years ago
Today, your paint line must produce 4950 gallons of beige paint. Your four step manufacturing process has the following scrap ra
Eddi Din [679]

Answer:

For paint line to must produce the 4950 gallons of beige paint, it needs total of 5174.1 Kg. It accounts for the factors which are mentioned in the question . Explanation for this is attached in the image.

Explanation:

Explanation is in the attached image.

7 0
3 years ago
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. Thi
Mrrafil [7]

Answer:

a. 9%

b. Yes, the firm earning an economic profit of 2%

c. Yes, Industry will see entry or exits

d. Rate of return of economy = 7%

Explanation:

a. Percentage rate of return = Earning ÷ Investment by founders × 100

= $18 ÷ $200 × 100

= 9%

b. Company rate of profit - Rate of profit of economy

= 9% - 7%

= 2% > 0

Yes, the firm earning an economic profit of 2%

c. Yes, Industry will see entry or exits because industry is competitive in nature and would to like to compete to others by satisfying the consumers . In perfect competitive markets there will be no entry or exits and critical characteristics reason companies are free for entry and exit for marginal profits.

d. Industry is competitive , there will be supplier to serve the market and its hard to decide the price of the product.

Hence, the rate of return long run equilibrium earned by firm = Rate of return of economy = 7%

4 0
3 years ago
Other questions:
  • The SRT partnership agreement specifies that partnership net income be allocated as follows:
    10·1 answer
  • Chip bought 10 shares of apex company for $40 each and later sold all of them at $45 each. this transaction resulted in what typ
    14·2 answers
  • Outline two ways in which Britax reduced resistance to change.
    13·1 answer
  • Henderson is a local automobile salesperson. He earns 6% commission on all of his automobile sales. Last month, he earned $9,900
    5·1 answer
  • GroundSwell Pools, Inc., agrees to build a swimming pool for Francis, but fails to complete the job. Francis hires EquiAqua, Inc
    11·1 answer
  • You are the owner of a smoothie shop in California. Afterhearing a podcast about customer relationship management (CRM), youdeci
    12·1 answer
  • How can you determine an independent contractor?
    10·2 answers
  • Do some research on mergers and acquisitions. What were the five largest mergers– acquisitions last year? Make a list of the par
    7·1 answer
  • When did the FBI establish?
    7·2 answers
  • Your buyers love the 1891 victorian they have under contract, but they want to get both the water and the paint tested as soon a
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!