In which of the following situations is it most advantageous to be saving? Select one: A. The real interest rate is 13 percent and the expected inflation rate is 15 percent. B. The real interest rate is 4 percent and the expected inflation rate is 4 percent. C. The real interest rate is 1 percent and the expected inflation rate is 2 percent. D. The real interest rate is 11 percent and the expected inflation rate is 9 percent. E. The real interest rate is 7 percent and the expected inflation rate is 6 percent.

Q: 4. Inflation benefits people who a. lend at fixed interest rates. c. save at fixed interest rates.…

A: We know that if inflation increases then the purchasing power of money decrease. Also, the real…

Q: What does the interest rate effect say? a. Interest rates causes inflation to go down b. Interest…

A: As prices go up,there is inflation,to control inflation money supply would be decreased by…

Q: 76. Ionnis puts money in the bank and earns a 7 percent nominal interest rate. What happens if the…

A: Inflation rate: - it is the rate of increase in the prices of goods and services in an economy.

Q: True or false? The nominal rate of interest is the difference between the real rate and the…

A: Nominal interest rate is the interest rate which is stated in loan agreement . It is the rate of…

Q: In which situation is the real interest rate highest? In which situation is the real interest rate…

A: Nominal interest rate refers to the interest rate before taking inflation into account. A real…

Q: Suppose nominal interest rates increase from 8 percent to 10 percent, while inflation increases from…

A: Given information: Nominal interest rates increase from 8 percent to 10 percent, while inflation…

Q: You are thinking about building a new mall. Your trusted economic consultants say the mall will…

A: Real Rate of Return:The real rate of return represents the actual rate of return an investor or…

Q: c. Predict how each chanage will affect interest rates. Increase interest rates C. A financial…

A: Interest rates refer to the cost of borrowing money or the return earned on an investment, usually…

Q: If long-term interest rates are 8% and short-term interest rates are 3%, the market expects that:…

A: Short-term interest rates are the interests on short-term financial instruments (assuming other…

Q: A company calls to notify you that the interest rate on your credit card will increase from 19% to…

A: There is a difference between percentage points and percent change. The percentage points is the…

Q: Explain why people with a fixed-rate mortgage would benefit from high inflation>

A: An interest rate that remains fixed for the life of the loan is known as a fixed mortgage rate.…

Q: The benefit of saving is the: a. inflation rate b. real interest rate c. saving rate d. nominal…

A: Savings refers to the act of setting aside a portion of one's income or resources for future use…

Q: Discuss the relationship between nominal and effective interest rates?

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: Which is TRUE about inflation and interest rates? * a. None of the choices. b. The inflation…

A: Which is TRUE about inflation and interest rates? *

Q: d. Real

A: Nominal interest rates are the interest rates that are taken into account before making any…

Q: Q. Differentiate the Expected real interest rate to Realized real interest rates? Give examples.

A: The realized interest rate is given by subtracting the nominal rate from the current inflation rate.…

Q: If the inflation rate is 2 percent, interest rates are 8 percent, and GDP is growing at 3 percent…

A: Inflation rate is the rate at which price level is increasing.

Q: hich of the following groups is most harmed by unanticipated inflation? Select one: a.Those whose…

A: Inflation refers to the sustained rise in the general price level. It reduces the real value of…

Q: The real interest rate is 6 percent a year and the income tax rate is 50 percent. With no inflation,…

A: After tax return before inflation = Nominal return ×(1-tax rate)= 6% × (1-50%)=0.03=0.03×100=3%

Q: 29. Saving requires interest rates to be sufficiently high to prevent free riders. savers to be paid…

A: Saving refers to the portion of current income for future use or the flow of resources accumulated…

Q: If the  nominal  interest  rate  is  less  than  the  real  interest rate,  we  know  that both the…

A: Fisher's effect describes the relationship between nominal interest rate and real interest rate.…

Q: Jim holds $50,000 in money at the beginning of the year. The annual inflation rate is 2 percent, and…

A: Inflation tax signifies a fall in purchasing power of a given amount of money due to presence of…

Q: Fearing a recession, the government decides to give citizens a tax rebate to buy Christmas gifts.…

A: The government makes a decision according to the current market situation and future expectations.…

Q: Suppose Emma owns an investment portfolio. Last year, she earned a 3.65% portfolio return. During…

A: answer is given below

Q: Gladys agrees to lend Kay $1,000 for one year at a nominal rate of interest of 5 percent. At the end…

A:

Q: Section 2: Short Essay Questions: 1. A source of constant discussion among applied econometricians…

A: Regressions are used to quantify the link between one variable and the other factors that are…

Q: For each of the following years, determine the real interest rate. Find the difference between this…

A: Please find the answer below.

Q: If inflation is currently 2.55% and a bank is lending money at 7.75% interest, what is the real…

A: Inflation (I) = 2.55% Bank interest rate (R) = 7.75%

Q: a government is facing high inflation, then it will take an action as following:   I. increase…

A: Answer: Correct option: 1 (increase taxes, increase discount rate) Explanation: Inflation refers to…

Q: Interest rates can be expressed in real or nominal terms. Which of the following is most correct?…

A: Inflation refers to a rise in the general prices of goods and services.

Q: 2) The nominal interest rate is equal to the real interest rate if A) Expected inflation is greater…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: I percent. It follows that Select one: O a. the dollar value of savings increased at 2 percent, and…

A: Inflation is the rate at which the value of a currency is falling and, consequently, the general…

Q: If the equilibrium price of bonds increases, what happens to the associated interest rate?

A: In a bond market, the price and interest rate are inversely related.

Q: 1. Calculate the following: a) real interest rate if expected inflation is 3% and nominal interest…

A: DISCLAIMER  “Since you have asked multiple question, we will solve the first question for you as per…

Q: 1. Explain the forces of supply and demand in determining the equilibrium interest rate.

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: When the interest rate falls, how does the opportunity cost of holding money and the quantity of…

A: Interest rates are defined as the form of reward given to the investors for investing their money…

Q: The price level was 118.3 in 1988, 124.0 in 1989, and 130.7 in 1990. What were the rates of…

A: The inflation rate shows the persistence increment in the price level in the economy. The inflation…

Q: For each of the following years, determine the real interest rate. Find the difference between this…

A: Introduction The actual interest rate calculates how much more money the lender makes when the…

Q: Suppose that in 2019, the price of food increased to $100 and the price of housing increased to…

A: Now, the price of food F1= $100  the price of housing increased H1 = $200. the cost of the…

Q: When lenders begin to expect higher levels of future inflation,   a. Nominal interest rates today…

A: The inflationary expectations play a major role in setting the nominal interest rate and real…

Q: d. the government's budget must be balanced.

A: Explanation: The requirements for reducing inflation while not inflicting a recession  except…