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aksik [14]
3 years ago
11

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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Assume Ireland and Mali can both produce grain and dates, and that the only limited resource is the farming labor force, meaning
likoan [24]

Answer:

a. Which country has the absolute advantage in producing dates?

Mali

b. Which country has the absolute advantage in producing grain?

None

c. Which country has the competitive advantage in producing dates?

Mali

d. Which country has the comparative advantage in producing grain?

Ireland

Explanation:

Opportunity cost of producing dates:

Ireland = 10 / 5 = 2 tons of grains

Mali = 10 / 25 = 0.4 tons of grains

Opportunity cost of producing grains:

Ireland = 5 / 10 = 0.5 tons of dates

Mali = 25 / 10 = 2.5 tons of dates

7 0
2 years ago
Sally works for Timber Products, Inc. The basis for her contribution under the Federal Insurance Contribution Act to help pay fo
Delicious77 [7]

Sally works for Timber Products, Inc. The basis for her contribution under the Federal Insurance Contribution Act to help pay for benefits that will partially make up for her loss of income on retirement is her ​annual wage base.

Answer: Option B

<u>Explanation:</u>

The contribution that Sally, who is working for Timber Products incorporation, has to make for federal insurance contribution act is based on the amount of wage that Sally gets on an annual basis or the wage that she gets in a year.

A part of that wage which is a particular percentage is paid to the federal insurance contribution act who is going to benefit her in case she incurs any kind of loss of income.

8 0
3 years ago
The demand for wooden pencils is very responsive to a change in price. That is, the demand for these pencils is highly elastic.
Natalija [7]

Answer:

D. Price will rise, quantity purchased will fall, and gross revenues will fall.

Explanation:

It will lead to a higher price of the good as the management has to take into consideration the amount to wages to be paid to the workers, thus increasing the price of the goods. This will result to a lower demand at a higher price  because the price increases and competitions will take advantage of the situation and that will also reduce the revenue of the firm.

4 0
2 years ago
This table shows the number of cookies several bakeries sell each day. Bakery Number of Cookies Sold Mrs. Track’s 90 Chips 100 T
Serggg [28]

Answer: d. Uncle John's

Absolute Advantage refers to the ability of an individual, company, region or country to produce a particular product or service at a price lower than that of his or her or its competitors.

When the price for the company's products are lower in comparison to other similar products, the demand for its products are more and it's able to sell more number of units than its competitors.

In this case, Uncle John's has the absolute advantage since it sold the most number of cookies (125)









6 0
3 years ago
Read 2 more answers
Foreign saving is used for domestic investment when foreigners engage in
dmitriy555 [2]

Foreign saving is used for domestic investment when foreigners engage in either foreign direct investment or foreign portfolio investment.

 

<span>To add, ‘Foreign savings’ and the ‘net external resources inflows’ are the two popular acronyms used for the current account deficit in the balance of payments.</span>

8 0
3 years ago
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