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leylaanddade
28.12.2019 •
Business
You lent $700 to a friend for one year at a nominal rate of interest of 4 percent. inflation during that year was 3 percent. did you experience an increase or decrease in the purchasing power of your money? how much did it increase or decrease?
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Ответ:
Answer and Explanation:
Since the inflation is lesser than the nominal rate, the real rate has been positive.
Purchasing power increased by the real rate of interest
As per Fisher Equation
(1 + Real rate) = (1 + Nominal rate)/(1 + Inflation)
= (1.04/1.03)
= 1.009701
Real rate = 0.009701
= 0.97%
Purchasing power increased by 0.97%
Ответ: