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If the inflation rate is smaller than the nominal interest rate, the real interest rate is

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If the inflation rate is smaller than the nominal interest rate, the real interest rate is

Question 1.

Lola wants to make an 6% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 5%. She should charge an interest rate of

▸ 1%.

▸ 6%.

▸ 11%.

▸ 16%.

Question 2.

If the inflation rate is smaller than the nominal interest rate, the real interest rate is

▸ positive.

▸ negative.

▸ zero.

▸ either positive or zero.

Textbook

Principles of Economics

Edition: 12^th

Authors: Case, Fair, Oster

Read 67 times

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