Question

) If the real interest rate is positive, then a unit of future consumption can be had for the sacrifice of less than one unit of current consumption. True or False

Answer 1

Answer:

The correct answer is True.

Explanation:

The positive real interest rate is that derived from the existence of a nominal interest rate higher than the inflation rate. The refusal, on the other hand, is that resulting from a nominal interest rate lower than the inflation rate.

For example, when a bank pays for savings an annual effective interest rate of 5%, when inflation is 10%, it means that it is paying the saver a negative real interest rate, as it receives, upon withdrawing its deposit, an amount that in real terms (of purchasing power) is less than the initial.

Normally, there are positive real rates, since these are the ones that encourage savings. However, in conditions of high inflation, in which the accounts of the State, of the banks and of all the economic agents are deranged, the negative real rates begin to appear.