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The relationship between nominal interest rates (i), real interest rates (r) and the inflation rate (T) is given by
The relationship between nominal interest rates (i), real interest rates (r) and the inflation rate (T) is given by... a. r = - i b. i = r + TT O c. i=r-TI O d. r- i = TT
The rate at which a commercial bank's best customers can borrow is called... a. The deposit rate. b. The bank rate. O c. The prime rate. O d. The settlement rate.
Barter is an inefficient medium for exchange because it relies on... a. State control of key inputs. b. A standard of deferred payment. c. The double coincidence of wants. d. A weak system for tax collection.
Expert Solution
1. b i = r+ pi
Real interest rate = Nominal interest rate - Inflation.
Real interest rate adjust nominal interest rate for inflation.Inflation decreases the real return as purchasing power of money falls
2. c, The prime rate
3. c. Double coincidence of wants.
It means what one wants to sell is exactly what other wants to prurchase.
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