Suppose the CPI is 120 in year 1 and 150 in year 2. If First National Bank charges a nominal interest rate of 30 percent in year 2, what is the bank's real interest rate? Explain

Refer to the hypothetical data in the table to answer the three questions. What was the real interest rate in 2017? What was the inflation rate in 2018? What was the nominal interest rate in 2019? do % % % Year 2017 2018 2019 Nominal interest rate 9% 9% Real interest rate 5% 1% Inflation rate 1% 5%

What is the current inflation rate as measured by the Consumer Price Index? You can use either the February or March 2022 figure.  Describe the pattern of the Consumer Price Index since the beginning of 2020.  Describe the pattern of the CPI since 2010. (Hint: Utilize  Trading Economics (Links to an external site.) or FRED (Links to an external site.) to get the data.  Please note that the inflation rate is not the same thing as the level of the CPI. The inflation rate is measured as the percentage change in the level of the CPI during a period of time.

Q7. Suppose that your annual income (nominal) in year 1 is $45,000, and in year 2 is $51,232. If the CPI in year 1 is 143.6, and in year 2 is 150.7, a) Has your real income increased, decreased, or remain unchanged? Explain your answer. b) What is the inflation rate between the two years?

Define the Nominal Interest Rates?

Suppose a bank wants to earn a real rate of interest equal to 7.23% and they expect the rate of inflation to be 6.34%.  At what interest rate will they set this loan to be?  Answer this as a percentage and round your answer to two digits after the decimal without the percentage. ex. If you found the inflation rate to be 5.125%, answer 5.13.

Consider an economy where: The real rate of interest The nominal rate of interest 4.11% 7.09% Calculate the anticipated rate of inflation. % (Enter your response as a percentage rounded to two decimal places)