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hjlf
3 years ago
7

The CPI is 120 in year 1 and 150 in year 2. All inflation is anticipated. If Gringotts Bank charges an interest rate of 20.00 pe

rcent in year​ 2, the​ bank's real interest rate is nothing​%. ​(Round your response to two decimal places and include a minus sign if necessary.​)
Business
1 answer:
liq [111]3 years ago
3 0

Answer:

Gringotts Bank real interest rate = 20% - 25% = -5%

Explanation:

real interest rate = nominal interest rate - inflation rate

the inflation rate between year 1 and year 2 = [(CPI year 2 - CPI year 1) / CPI year 1] x 100 = [(150 - 120) / 120] x 100 = (30 / 120) x 100 = 0.25 x 100 = 25%

Gringotts Bank real interest rate = 20% - 25% = -5%

since the interest rate is negative, that means that Gringott Bank is actually losing money by lending it at 20% since the inflation rate is much higher.  

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3 years ago
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Ostrovityanka [42]

Answer: Please refer to Explanation

Explanation:

The terms will be listed in bold at the end of the statement. If you require further clarification please do comment.

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5 0
3 years ago
Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpki
valkas [14]

Answer: Option (B) is correct.

Explanation:

Correct option: Decreasing marginal product.

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So, Marginal Product = \frac{change\ in\ Q}{Change\ in\ I}

Where,

Q = Output

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Hence, Joan's production function exhibits decreasing marginal product.

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3 years ago
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zhenek [66]

Answer:

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