Question

To obtain a given real rate of return, lenders must charge a ______ nominal interest rate in the face of decreasing inflation. Select one: a. constant b. regular c. lower d. higher

Name: to obtain a given real rate of return lenders must charge a nominal interest rate in the face of decreasing inflation select one a constant b regular c lower d higher 16738
Uploaded: 2022-04-27T07:06:17-08:00
Duration: 1 min 33 s
Channel: Haricharan Gupta
Description: to obtain a given real rate of return lenders must charge a nominal interest rate in the face of decreasing inflation select one a constant b regular c lower d higher 16738

          To obtain a given real rate of return, lenders must charge a ______ nominal interest rate in the face of decreasing inflation.
Select one:
a. constant
b. regular
c. lower
d. higher

Added by Stephanie R.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Haricharan Gupta

04/27/2022

Step 1

This is because the real rate of return is the nominal interest rate minus the inflation rate. So, if inflation decreases, lenders can charge a lower nominal interest rate to still achieve the same real rate of return. Show more…

Show all steps

Thanks for your feedback!

To obtain a given real rate of return, lenders must charge a ______ nominal interest rate in the face of decreasing inflation. Select one: a. constant b. regular c. lower d. higher