Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 8, Problem 11E
(a)
To determine
The circumstances when the real interest rate becomes negative.
(b)
To determine
Discuss whether the nominal interest rate becomes negative or not.
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Do you think a negative nominal interest rate can happen? What about a negative real interest rate? Explain.
Can the nominal interest rate be negative? Discuss.
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Do you agree that there is no difference between the nominal interest rate and the real interest rate? Explain why or why not.
Chapter 8 Solutions
Macroeconomics (Fourth Edition)
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Similar questions
- Which of the following would cause the real interest rate to be negative? a.When the nominal interest rate is greater than the inflation rate b.When the nominal interest rate is greater than the rate of deflation c.When the nominal interest rate is smaller than the rate of deflation d.When the nominal interest rate is smaller than the inflation rate e.When the nominal interest rate is equal to the inflation ratearrow_forwardIf the nominal interest rate on an asset is 10% and inflation is also 8%, what is the real interest rate of that asset? What if inflation is 12%?arrow_forwardExplain the meanings of nominal interest rate and realinterest rate. How are they related?arrow_forward
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