Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 7: Q.7.4 (page 142)

Evaluate who loses and who gains from inflation and distinguish between nominal and real interest rates

Short Answer

Expert verified

Long term bond investors, retired people, credit card holders etc lose and stockholders and investors gain from inflation.

Step by step solution

01

introduction

Individuals who lose from inflation are - Long term bond investors, retired people, credit card holders etc.

Individuals who lose from inflation are - stockholders and investors etc.

02

explanation

The nominal interest rate is the rate of interest that doesn't represent inflation. It is the interest rate that is cited on stocks, securities and protections.

The real interest rate is the rate of interest that considers inflation. It is the real rate which is payable on stocks, securities and protections.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Consider Table 7-1. Suppose that the 2019 price of corn was to rise to 8.50\( per bushel but that the price of a digital device was to fall to 300\). The quantities of the two commodities remain the same, however. How would these changes affect the value of the 2019 price index?

Suppose that in Figure 7-2, the number of people employed was to expand by 9.2 million, and the number of people unemployed was to rise by 7.1 million. What would be the new values of the labour force and of the unemployment rate?

Suppose that the U.S. nonmilitary, noninstitutionalized adult population is 254 million, the number employed is 156 million, and the number unemployed is 8 million.

a. What is the unemployment rate?

b. Suppose there is a difference of 60 million between the adult population and the combined total of people who are employed and unemployed. How do we classify these 60 million people? Based on these figures, what is the U.S. labour force participation rate?

Suppose that in 2017, a typical U.S. student attending a state-supported college bought 10 textbooks at a price of 100\( per book and enrolled in 25 credit hours of coursework at a price of 360\) per credit hour. In 2018, the typical student continued to purchase 10 textbooks and enrol in 25 credit hours, but the price of a textbook rose to 110\( per book, and the tuition price increased to 400\) per credit hour. The base year for computing a "student price index" using this information is 2017. What is the value of the student price index in 2017? In 2018? Show your work.

How might government policies that make it more difficult for businesses to fire workers cause those businesses to consider more carefully and hence more slowly -whom they hire for positions in the first place? Explain your reasoning.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free