Ask Question
BusinessBusiness
29 October, 03:24

Currently, the price index used to calculate the inflation rate is equal to 90. The general expectation throughout the economy is that nect year its value will be 99. The current nominal interest rate is 12 percent. What is the real interest rate?

+3
Answers (1)
  1. 29 October, 05:33
    0
    Answer: The correct answer is "2%".

    Explanation: The inflation rate is calculated through the formula:

    (price index 1 - price index 0 / price index 0) x 100

    So : (99 - 90 / 90) x 100 = 10% is the expected inflation rate.

    And the real interest rate is equal to the difference between the nominal interest rate and the inflation rate.

    So: 12% - 10% = 2% is the real interest rate.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Currently, the price index used to calculate the inflation rate is equal to 90. The general expectation throughout the economy is that nect ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.
Answers (1)
On January 1, 2020 (the date of grant), Concord Corporation issues 2,300 shares of restricted stock to its executives. The fair value of these shares is $69,000, and their par value is $11,500.
Answers (1)
As the sales manager at Audio Equipment Corp., Simone makes the best use of the limited resources available to her in order to achieve her company's sales goals. Which aspect of management is Simon practicing? a. Groupthink b. Ambiguity c.
Answers (1)
Which part of a database is organized most like a spreadsheet, with rows and columns? A. A form B. A report C. A table D. A field
Answers (2)
Cashier's checks are generally required for A. grocery store purchases. B. mortgage fees. D. credit card payments.
Answers (1)
New Questions in Business
Kartman Corporation makes a product with the following standard costs: Standard Quantity Standard Price Standard Cost/Unit Direct materials 6.7 pounds $ 7.20 per pound $ 48.24 Direct labor 0.6hours $26.00 per hour $ 15.60 Variable overhead 0.
Answers (1)
Why does amount of debt or money owed have as much weight as credit history in determining a person's credit score?
Answers (1)
Specialization and the division of labor typically result in
Answers (1)
Asking yourself "What can I do to build a loyal customer base?" is an example of A. multitasking. B. research. C. creativity. D. bottom line.
Answers (1)
A service animals can be a cut snake miniature horse kangaroo none of the above
Answers (1)
Home » Business » Currently, the price index used to calculate the inflation rate is equal to 90. The general expectation throughout the economy is that nect year its value will be 99. The current nominal interest rate is 12 percent. What is the real interest rate?
Sign Up Forgot Password?