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3 years ago

Why should investors know the difference between nominal and real interest rates?

Business

1 answer:

xxMikexx [17]3 years ago

3 0

Answer:

to recognize the effects of inflation

Explanation:

The nominal rate of interest is the interest earned before adjusting for inflation. The nominal interest rate is simple to recognize and calculate. It is the rate quoted on loans, deposits, bonds, and mutual funds. The nominal rate communicates to the investor the percentage of returns to expect from their investment. The higher the percentage, the better the returns. However, nominal interest does not take account of inflation.

Inflation erode the purchasing power of money. A high inflation rate will mean that any investment gains may not benefit the investor as the currency will have weakened. The real interest rate considers inflation rates. It tells the investor the actual gain from an investment after adjusting for inflation.

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8. In the short run, there is a negative relationship between inflation and employment. A: True B. False

makvit [3.9K]

Answer: False

In the short-run, inflation and unemployment are inversely related; as one quantity increases, the other decreases. In the long-run, there is no trade-off. In the 1960's, economists believed that the short-run Phillips curve was stable.

Explanation:

https://courses.lumenlearning.com/boundless-economics/chapter/the-relationship-between-inflation-and-unemployment/

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3 years ago

Majer Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or RateStandard Co

irina1246 [14]

Answer:

Variable overheads efficiency variance = $13,040 favorable

Explanation:

Variable overheads efficiency variance is the difference between the standard hours of actual output and actual hours valued at the standard variable overhead rate per hour

Hours

5,900munits should have taken (5,900× 0.9) 5,310

but did take 2050

efficiency variance in hours 3,260 favorable

Standard rate per hour $4.00

Variable overheads efficiency variance 13,040 favorable

Variable overheads efficiency variance = $13,040 favorable

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3 years ago

Many farmers practice "crop rotation" by planting a field with corn one year and soybeans the next. why might they do this?

lisabon 2012 [21]

The reason that they do this because rotating crops has the capability of keeping the nitrogen from being depleted in the soil as nitrogen fixing bacteria are likely to be found in the nodules of the roots of the soybeans and not on the corn’s roots that makes soybeans the next after the corn is planted first.

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3 years ago

Not all goods are normal goods. If the demand for a good rises when income falls, the good is called an ________ ________. An ex

oksano4ka [1.4K]

Answer:

Inferior good

Explanation:

An inferior good is a good for which demand rises when income falls and demand falls when income rises.

on the other hand, Normal goods are goods that are goods whose demand increases when income increases and falls when income falls

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3 years ago

Due to the h1n1 flu outbreak, the demand for hand sanitizer tripled. Should johnson & johnson increase production of their p

GuDViN [60]

Answer: No, johnson & johnson should not double its production capacity of their purell hand sanitizer.

Explanation: An increase in demand of hand sanitizers due to the H1N1 flue will shift the demand curve for hand sanitizers to the right. The price of hand sanitizers will increase meaning that greater production levels are profitable. The firms can take advantage of this profitability by increasing manufacturing capacity. However, capacity will be increased for many years and the H1N1 flu is a temporary phenomenon. So, once the H1N1 flu is controlled demand for hand sanitizer is likely to return to previous levels. As a result the increased capacity will then remain idle and unprofitable. So, johnson & johnson should not double its production capacity of their purell hand sanitizer.

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3 years ago