Suppose That Lenders Want to Receive a Real Rate of Interest

question 158

Multiple Choice

Suppose that lenders want to receive a real rate of interest of 5 percent and that they expect inflation to remain steady at 2 percent in the coming years. Based on this, lenders should charge a
Nominal interest rate of

• A) 2 percent.
• B) 3 percent.
• C) 5 percent.
• D) 7 percent.

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Definitions:

Copyright

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Official documents filed with a government body, detailing a business's income, expenses, and taxes owed for a specific fiscal period.

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