Question
Can you teach me how to solve please include your procedure. Thank you :) 1. Nancy agreed to lend $5 to Sue at an expected
Can you teach me how to solve please include your procedure. Thank you :)
1. Nancy agreed to lend $5 to Sue at an expected real interest rate of 5% over the following 1 year. They had expected an inflation rate of 8%, but actual inflation was 7%. On what fixed nominal interest rate did the two agree? (express your answers in percentage points. Round to 1 decimal place)
2. Nancy agreed to lend $6 to Sue at a nominal interest rate of 2% over the following 1 year. Sue had expected an real rate of 5%, but the actual real return was 7%. What was the expected inflation rate? (express your answers in percentage points. Round to 1 decimal place)
3. Nancy agreed to lend $3 to Sue at a nominal interest rate of 6% over the following 1 year. Sue had expected an real rate of 6%, but the actual real return was 8%. What was the actual inflation rate? (express your answers in percentage points. Round to 1 decimal place)
4. Nancy agreed to lend $6.1 to Sue at a nominal interest rate of 8% over the following 1 year. They had expected an inflation rate of 7.9%, but actual inflation was 5.1%. What real interest rate was expected? (express your answers in percentage points. Round to 1 decimal place)
5.
Year | Salary | CPI |
2000 | 26 | 35 |
2018 | 26 | 32 |
See the above CPI values and salary values. Salary is expressed in contemporary dollars. What was the salary in 2000 expressed in 2018 dollars (round to the nearest cent)?
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