EC201 chapter_7_Quiz Full

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Unformatted text preview: that she is planning to make, and the expected inflation rate during the wants to period of the loan is 5%. She should charge an interest rate of A) 6%. B) 16%. C) 11%. D) 1%. Answer: C Diff: 2 Topic: Inflation Skill: Analytic AACSB: Analytic Skills 46) If the inflation rate is smaller than the nominal interest rate, the real interest rate is A) positive. B) negative. C) zero. D) either positive or zero. Answer: A Diff: 2 Topic: Inflation Skill: Analytic AACSB: Analytic Skills 47) Eliza \$100 from Sandy. Sandy wants to make 4% real return on his money, so they both agree on a 4% interest wants to rate paid next year. Eliza and Sandy did not anticipate any inflation, yet the actual inflation turned out to borrow be -5% next year. In this case, A) Eliza will pay an 9% real interest rate. B) Sandy is better off. C) Eliza will pay a 4% nominal interest rate. D) all of the above Answer: D Diff: 2 Topic: Inflation Skill: Analytic AACSB: Analytic Skills 48) Dean from Tim. Tim wants to make a 10% r...
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## This note was uploaded on 11/13/2013 for the course BUSINESS EC201-03 taught by Professor Auguste during the Fall '13 term at Monroe.

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