PRINCIPLES OF MACROECONOMICS-CONNECT ACC
7th Edition
ISBN: 9781264088485
Author: Frank
Publisher: MCG
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Chapter 6, Problem 6.9CC
To determine
Identify the real
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Students have asked these similar questions
If the real interest rate (rreal) you pay on a one-year loan ends up being 7%, and inflation was 6% over
that year, what is the nominal interest rate on your loan?
Hint: enter your answer without a % sign
Example: if the answer is 4%, enter 4
Dean borrows $400 from Tim. Tim wants to make a 7% real return on his money, so they both agree on a 7% stated interest rate paid next year. Dean and Tim did not anticipate any inflation, yet the actual inflation turned out to be 2% next year. In this case, what is Tim’s real rate of return?
Consider the simple economy that produces only three products. Use the information in the following table to calculate the (annual rate of) inflation for 2018 as measured
by the consumer price index (CPI).
BASE YEAR (2010)
2017
2018
Product
Quantity
Price
$10.00
2.00
Price
Price
Haircuts
3
$11.00
$16.20
2.40
Hamburgers
Movies
10
2.45
15.00
15.00
14,00
The inflation rate for 2018 as measured by the consumer price index (CPI) is%. (Enter your response rounded to two decimal places.)
Chapter 6 Solutions
PRINCIPLES OF MACROECONOMICS-CONNECT ACC
Ch. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - Prob. 1PCh. 6 - Prob. 2P
Ch. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Prob. 6.1CCCh. 6 - Prob. 6.2CCCh. 6 - Prob. 6.3CCCh. 6 - Prob. 6.4CCCh. 6 - Prob. 6.5CCCh. 6 - Prob. 6.6CCCh. 6 - Prob. 6.7CCCh. 6 - Prob. 6.8CCCh. 6 - Prob. 6.9CC
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Similar questions
- Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.arrow_forwardAssume that the annual rate of inflation is expected to be 4 per cent per annum for the next five years. Also assume that the required rate of return of 14 per cent you employed above is a market determined rate and incorporates an allowance for the expected rate of inflation of 4 per cent. Explain how you would take the expected rate of inflation into account in a revised analysis.arrow_forwardIn Zimbabwe the rate of inflation hit 90 sextillion percent in 2009, with prices increasing tenfold every day. At that rate, how much would a $100 textbook cost one week later? Hint: Use the following equation to calculate future price: Future price = (current price) x (inflation rate)', where t is the number of days in the future. billionarrow_forward
- 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.arrow_forwardConsider the simple economy that produces only three products. Use the information in the following table to calculate the (annual rate of) inflation for 2022 as measured by the consumer price index (CPI). Product Haircuts Hamburgers Movies BASE YEAR (2010) Price Quantity 5 $10.00 2.00 15.00 2021 Price $11.00 2.45 15.00 2022 Price $16.20 2.40 14.00 12 7 Using the information in the table, the CPI for 2021, with 2010 as the baso year, is. (Enter your response rounded to one decimal place.) The inflation rate for 2022 as measured by the consumer price index (CPI) is %. (Enter your response rounded to two decimal places.)arrow_forward
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