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NeX [460]
3 years ago
12

If interest rate parity holds and the annual German nominal interest rate is 3 percent and the U.S. annual nominal rate is 5 per

cent and real interest rates are 2 percent in both countries, then inflation in Germany is about _______________ than in the United States.
A) 2 percent higher
B) 2 percent lower
C) 1 percent higher
D) 1 percent lower
E) 4 percent lower
Business
2 answers:
chubhunter [2.5K]3 years ago
4 0

Answer:

B) 2percent lower

Explanation:

Nominal interest rate = Real interest rate + inflation rate

Inflation rate = Nominal interest rate- real interest rate.

For Germany:

Given

Nominal rate = 3%

Real interest rate= 2%

Inflation rate = 3%-2%

Inflation rate for Germany = 1%

For United State:

Nominal interest rate = 5%

Real interest rate = 2% (same as for Germany)

Inflation rate = 5%-2%

Inflation rate for US = 3%.

The inflation rate in US is therefore 2% higher than that of Germany OR the inflation rate in Germany is about 2% lower than that of the United States.

Gelneren [198K]3 years ago
3 0

Answer:

B) 2 percent lower

Explanation:

Norminal interest rate is an economic terminology used to describe the interest rate of an economy before considering or adjusting the impact of Inflation on the economy.

Real interest rate is the interest rate of an economy obtained after adjusting the impact or effects of the Inflation. This will reveal the actual cost of borrowing and the yield to the lender of the money.

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<span>With the start of each new era in Japan, the country's capital changed locations because of the reason that they wanted to be under the governing of a new head or leader. The capital wanted to start fresh, and new.  </span>
8 0
3 years ago
Increasing the reserve requirement is a powerful _____ weapon that reduces the overall supply of money.
cestrela7 [59]
Increasing the reserve requirement is a powerful ANTI INFLATION weapon that reduces the overall supply of money.
In order to reduce the amount of money in an economy, the federal reserve can increase the reserve requirements of the commercial banks in the economy. This will reduce the amount of money that the banks can give out as loan and this will work to prevent inflation.
3 0
3 years ago
Landrum Corporation is considering investing in specialized equipment costing​ $250,000. The equipment has a useful life of 5 ye
aalyn [17]

Answer: ARR = Average profit/Initial outlay x 100

               ARR = $19,000/$250,000 x 100

               ARR = 7.60%

The correct answer is C

               

               Depreciation = Cost - Residual value/Estimated useful life

                                       = $250,000 - $20,000/5 years

                                       = $46,000 per annum

               Average profit = Total profit/No of years

                                         = $325,000/5

                                         = $65,000

                                                                       $

              Average profit                           65,000

        Less: Depreciation                           46,000

       Average profit after depreciation   19,000

Explanation: In determining the accounting rate of return of the investment, there is need to calculate depreciation using straight line method. The amount of depreciation would be deducted from the average profit so as to obtain the average profit after depreciation. The average profit would be divided by the initial outlay in order to obtain the accounting rate of return.

5 0
3 years ago
On June 1, Year 1 Oxian Corp. receives $24,000 from a customer for work to be performed evenly over the next 2 years. What is th
pav-90 [236]

Answer:

$7,000 is the amount of revenue in year 1

Explanation:

The amount received from the customer is $24,000,which is payment for work to be performed over 24-month period i.e 2 years

In year 1,the work would be performed from June -December,hence  7-month worth of revenue should be recognized in year 1 as follows

revenue recognition in year=$24,000*7/24=$7,000

The amount of revenue attributable to year 1 on the income statement is $7,000

7 0
3 years ago
The manufacturing cost of the widgets your company makes has dropped by 50%. One of your customers, Sam, tells you he knows this
olga_2 [115]

Based on the above scenario, the answer is No. I would not tell Sue, because  manufacturing cost falls under business's internal factors that tends to affect firm's  profitability.

<h3>What is discount?</h3>

Others are:

  • Also note that if i tell her,  my actions will be found to be ethically incorrect.

The term discount is known to be an act or process where a price of product or services are  reduced prices to a price lower than the exact sum of that item.

Note that Based on the above scenario, the answer is No. I would not tell Sue, because  manufacturing cost falls under business's internal factors that tends to affect firm's  profitability.

Learn more about discount from

brainly.com/question/1548141

#SPJ1

4 0
2 years ago
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