5.The real risk-free rate of interest is 2%. Inflation is expected to be 3.5% the next 2 years and 6% during the next 3 years af
1 answer:
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Answer:
The correct solution is "6.09%".
Explanation:
Given:
Nominal rate,
= 6%
or,
= 0.06
As we know,
⇒
By substituting the values, we get
(%)
Answer:
Demand drops to zero
Explanation:
Infinite elasticity of demand is also called perfect elasticity of demand.
In this scenario the demand for a product is attached to it's price.
There is an infinite change in the quantity demanded as a result of change in price.
Graphically it is a horizontal demand curve as represented in the attached
Even a small increase in price will cause demand to fall to zero.
Examples are luxury goods such as high end cars and expensive jewelry.
