Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 23, Problem 9IAPA
To determine
To calculate:
The real interest rate in Brazil.
Nominal GDP:
The nominal GDP is adjusted to the inflation and real is not adjusted to the inflation percent. Inflation is the rise in prices of goods and services.
Money:
Money is something that is used in order to exchange for goods and services. Money is used as a medium of exchange in any country and the value it holds will differ from country to country.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Chapter Problem 4
In 2006, an economy was at full employment.
Question Help
The quantity of money was growing at 6.1 percent a year, the nominal interest rate was 2.8 percent a year, real GDP grew at 4.4 percent a year, and the inflation rate was 2.1 percent a year.
Calculate the real interest rate.
The real interest rate was
percent a year.
>>> Answer to 1 decimal place.
Enter your answer in the answer box and then click Check Answer.
Clear All
Check Answer
All parts showing
MacBook Air
888
F9
F10
F8
F6
F7
F4
F3
esc
F2
F1
#
$
7
4
1
2
E
R
T
Q
W
tab
F
G
A
caps lock
C
V
shift
command
この
I
How might a rapid rise in inflation harm you? How might a rapid rise in inflation help you? In answering this question consider your role as both a consumer, worker, and borrower. Consider the likely effect on your real wages, and any interest you receive as a saver. Would it be advantageous to borrow money if you expected inflation to rise? Does it make economic sense to open a savings account at a bank given the latest increase in the CPI.
The table shows the nominal interest rate and inflation rate in Japan for three years. Calculate the real interest rate for each year and complete the table.
>>>
Answer to 2 decimal places.
Screenshot attached below
Chapter 23 Solutions
Foundations of Economics (8th Edition)
Ch. 23 - Prob. 1SPPACh. 23 - Prob. 2SPPACh. 23 - Prob. 3SPPACh. 23 - Prob. 4SPPACh. 23 - Prob. 5SPPACh. 23 - Prob. 6SPPACh. 23 - Prob. 7SPPACh. 23 - Prob. 8SPPACh. 23 - Prob. 9SPPACh. 23 - Prob. 10SPPA
Ch. 23 - Prob. 1IAPACh. 23 - Prob. 2IAPACh. 23 - Prob. 3IAPACh. 23 - Prob. 4IAPACh. 23 - Prob. 5IAPACh. 23 - Prob. 6IAPACh. 23 - Prob. 7IAPACh. 23 - Prob. 8IAPACh. 23 - Prob. 9IAPACh. 23 - Prob. 10IAPACh. 23 - Prob. 1MCQCh. 23 - Prob. 2MCQCh. 23 - Prob. 3MCQCh. 23 - Prob. 4MCQCh. 23 - Prob. 5MCQCh. 23 - Prob. 6MCQCh. 23 - Prob. 7MCQCh. 23 - Prob. 8MCQ
Knowledge Booster
Similar questions
- Suppose there are 1200 units of money on an island, but money grows by 5.32% per year. Islanders spend each unit of money 2.3 times per year on average and this spending grows by 1.98%. The price level is at 34. GDP is expected to grow at 4.83%. What is the level of inflation? Answer this as a percentage without the percentage sign and round this to two digits after the decimal. ex. If you found the rate to be 5.125%, answer 5.13.arrow_forwardSuppose you borrow $100 from a bank at 5 percent interest for 1 year and the inflation rate that year is 10 percent. Was this loan advantageous to you or the bank?arrow_forwardSuppose you take out a loan for school this year for $4500. The bank expects that the rate of inflation for next year will equal 2%. You and the bank agree that in one year's time, you will pay back the full amount at an interest rate of 6%. Next year though, there is a sudden rise in inflation, causing inflation to equals 7%. How much will you pay back in one year?arrow_forward
- Assume you just deposited $1,000 into a bank account. The current real interest rate is 2%, and inflation is expected to be 6% over the next year. What nominal rate would you require from the bank over the next year? How much money will you have at the end of one year? If you are saving to buy a fancy bicycle that currently sells for $1,050, will you have enough money to buy it?arrow_forwardWhat are the impacts of inflation for borrowers and savers?arrow_forwardThe ___ is the nominal interest rate minus the rate of inflation. Question 13 options: real GDP real interest rate annualized interest rate nominally adjustedarrow_forward
- Suppose you make a loan of $100 that will be repaid to you in 1 year.if the loan is denominated in terms of nominal interest rate, are you happy or sad if inflation is higher than expected during the year. What if the loan instead had been denominated in terms of a real return.arrow_forwardInflation is defined as increases in the average prices in the economy. The February 2022 inflation rate is 7.9% which is the highest in the last 40 years. Have you noticed the price increases in your daily life? What goods are increased by the most? and by how much? What do you think are the causes of the recent inflation? How do you cope with the inflation?arrow_forwardUse the information in the table to calculate the %change in prices (inflation rate), using a chain-weighted methodology. Q1=2 Q2=3 Year (t) P1 E1 P2 E2 E(t) 2017 $1.05 $2.00 2018 $1.10 $2.10 2019 $1.10 $2.15 2020 $1.15 $2.15 Price Index Inflation Rate 2017 2018 2019 2020 Question 1: What is the inflation rate for 2019? a) 1.76% b) 1.16% c) -0.60% d) -3.02arrow_forward
- Use the following information to answer questions 5 through 12: Suppose that a typical market based in Japan consists of 200 Apples and 290 Textbooks. The table below shows data on prices for Apples and Textbooks in Japan for three years. Year Price of Apples Price of Textbooks 2014 $1.40 200 2015 $1.10 140 2016 $1.10 200 Assume that the base year is 2015.arrow_forwardThe following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1971 and 1975, which determined the nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1971 to 1975. (All rates rounded to the nearest 0.1 percent.) Year 1971 1972 1973 INTEREST RATE (Percent) 1974 1975 8.0 Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. 7.0 On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1971 to 1975. Next, use the green points (triangle symbol) to plot the real interest rates for those years. 6.0 5.0 4.0 3.0 2.0 1.0 0 -1.0 + -2.0 -3.0 Nominal Interest Rate (Percent) 4.5 4.5 7.2 1970 OOOO O 1971 O 1972 O 1973 8.0 O 1974 6.1 1971 O 1975 Inflation Rate (Percent) 4.2 3.3 6.3 11.0 9.1 1972 1973 YEAR 1974…arrow_forwardif the nominal interest rate is 18 percent and the real interest rate is 10 percent, the inflation rate isarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co