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Vlad1618 [11]
3 years ago
11

9. Problems and Applications Q9 Suppose that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Th

en inflation turns out to be lower than they both expected. True or False: The real interest rate on this loan is lower than expected.
Business
1 answer:
den301095 [7]3 years ago
8 0

Answer: False

Explanation:

The real interest rate is the nominal interest rate adjusted for inflation.

If the nominal interest rate was made with inflation in mind and this inflation is less than anticipated, the real rate will be higher not lower than expected.

For instance: Assume the nominal rate is 8% and the two parties assumed inflation would be 4%. Real rate would be:

= 8 - 4 = 4%

If inflation is instead 2%, real rate would be:

= 8 - 2 = 6%

Real rate would be higher than anticipated.

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Four students from your economics class are sitting in a local restaurant discussing the market for coffee. Below are quotes fro
Nastasia [14]

Answer:

D. Tasha: "If coffee drinkers expect the price of coffee to rise next month, then current demand will go up and lead to a price increase this month."

This is the only one with incorrect economic analysis

Explanation:

A. is correct because a shortage of supply would drop the price as we can see in the Graph 1 with the supply curve.

B. is correct because if the two goods are substitues then a lower price for caffeinated soft drinks like Mountain Dew would cause the consumer demand for coffe to go down because the consumers would prefer the good with lower price, rising the demand for Mountain dow in detriment of coffe.

C. is correct as we can see in the Graph 1, the increse in the demand would generate a higher price but it would make the demand go back to D1

D. is incorrect because if coffee drinkers consume more coffee this monht the price would lower.

8 0
3 years ago
An unusual development in the wake of the 2007-2009 financial crisis was that nominal interest rates on some financial instrumen
bogdanovich [222]

Answer:

c. The real interest rate is 1 percent and the expected inflation rate is minus 2 percent

Explanation:

Nominal interest rate = real interest rate + expected inflation rate.

For the third option, the nominal interest rate: 1% + (-2%) = -1%

For the first option, the nominal interest rate: 2% + 1% = 3%

For the second option, the nominal interest rate: 0 + 2% = 2%

For the fourth option, the nominal interest rate: -2% + 3% = 1%

I hope my answer helps you

4 0
3 years ago
What type of debt has the highest consumer debt balance?.
Zinaida [17]

The student loan debt has the highest consumer debt balance.

Below is an explanation about student loan debt.

<h3>What is Student Loan debt</h3>

Student debt is a type of debt that is owed by a current student, a formerly withdrawn student or graduated student to a lending institution, or to a financial institution

This type of loan has the highest consumer debt balance.

Lean more about types of debt at brainly.com/question/2754850

4 0
2 years ago
What is ethical behavior?
iren [92.7K]

Answer:

Ethical behavior includes honesty, integrity, fairness and a variety of other positive traits. Those who have others' interests in mind when they make decisions are displaying ethical behavior. In the workplace, there might be a standard for ethics set throughout the company.

Explanation:

3 0
3 years ago
If Pharrell invests his money in stocks and high-yield bonds, which phrase
Dmitriy789 [7]

The phrase  that describes his investment strategy is "Risky and Long term investor".

Basically, an investment strategy refers to set of rules, behaviors or procedures which are designed to guide an investor's on the selection of an investment portfolio.

  • Majority of investors fall between lower risk investor, moderate risk investor and higher risk investor.

  • The portfolio that he invests in ( stocks and high-yield bonds) is an example of high risk portfolio

In conclusion, the phrase  that describes his investment strategy is "<em>Risky and Long term investor</em>"

Read more about investment strategy:

<em>brainly.com/question/1101043</em>

3 0
2 years ago
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