Answer:
1) False
when the inflation is lower than expected, the real interest rate will be higher, since
real interest rate = Nominal interest rate - inflation.
2) Gains
In case of unexpected lower inflation the lender gains and the borrower loses.This is because real value of the loan increases due to lower inflation.
3) Loses
In case of unexpected lower inflation the lender gains and the borrower loses.This is because real value of the loan increases due to lower inflation.
Based on the information given the real rate of interest is:2%.
<h3>Real rate of interest</h3>
Using this formula
Real rate of interest=Nominal interest rate-Inflation rate-
Where:
Inflation rate=5%
Nominal interest rate=7%
Let plug in the formula
Real rate of interest=7%-5%
Real rate of interest=2%
Inconclusion the real rate of interest is:2%.
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Explanation:
The journal entries are shown below:
On August 26, 2016
Account receivable A/c Dr $7,000
To Allowance for doubtful accounts A/c $7,000
(Being the account receivable is written off)
Cash A/c Dr $7,000
To Account receivable A/c $7,000
(Being the cash received is recorded)
Only these two entries are recorded on August 26, 2016 which are shown above
Answer:
E. reduce barriers to entry because consumers are more satisfied.
Explanation:
