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Suppose you place 10000 in a retirement fund that earns a nominal interest rate of 8 percent If you expect inflation to be 5 percent or lower then you are expecting to earn a real interest rate of?
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∙ 12y ago
3 percent
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∙ 12y ago
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Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
Suppose that inflation is -3 per year and it is expected to continue at that rate in the future If the nominal interest rate is 0 per year then what is the real interest rate?
-3
What are the methods for accounting inflation?
Discuss the various methods of inflation accounting.
Is inflation harmful?
Too much inflation will ruin the economy but small levels of inflation will spur growth. Inflation is very harmful to any economy because it can ruin the economy's development and growth and this is not suppose to be. Inflation is also very harmful to any economy because the people living in that economy might not survive the situation and this is when you see that an economy is affected and if nothing is done to it, it can cause an economy to collapse.
What positive effects of inflation can be listed?
It can benefit the inflators (those responsible for the inflation)It be benefit early and first recipients of the inflated money (because the negative effects of inflation are not there yet).It can benefit the cartels (it benefits big cartels, destroys small sellers, and can cause price control set by the cartels for their own benefits).It might relatively benefit borrowers who will have to pay the same amount of money they borrowed (+ fixed interests), but the inflation could be higher than the interests, therefore they will be paying less money back. (example, you borrowed $1000 in 2005 with a 5% fixed interest rate and you paid it back in full in 2007, let's suppose the inflation rate for 2005, 2006 and 2007 has been 15%, you were charged %5 of interests, but in reality, you were earning %10 of interests, because 15% (inflation rate) -- 5% (interests) = %10 profit, which means you have paid only 70% of the real value in the 3 years. Note: Banks are aware of this problem, and when inflation rises, their interest rates might rise as well. So don't take out loans based on this information.Many economists favor a low steady rate of inflation, low (as opposed to zero or negative) inflation may reduce the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reducing the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.Tobin effect argues that: a moderate level of inflation can increase investment in an economy leading to faster growth or at least higher steady state level of income. This is due to the fact that inflation lowers the return on monetary assets relative to real assets, such as physical capital. To avoid inflation, investors would switch from holding their assets as money (or a similar, susceptible to inflation, form) to investing in real capital projects.
Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
Suppose that inflation is -3 per year and it is expected to continue at that rate in the future If the nominal interest rate is 0 per year then what is the real interest rate?
-3
What is the correct formula for compound interest?
Suppose the amount invested (or borrowed) is K, Suppose the rate of interest is R% annually, Suppose the amount accrues interest for Y years. Then the interest I is 100*K[(1 + R/100)^Y - 1]
Using Retirement Calculators To Plan For Your Future?
For people thinking ahead and planning for their retirement ahead of time, the Internet is full of various retirement calculators that can help to plan quickly and accurately. What complicates the calculations involved with saving for retirement is compound interest and the effects of contributing to your retirement each year. While this can be difficult to do on pencil and paper, the different retirement calculators available on the Internet will do all of the difficult math for you. This means that you can concentrate less on the math and complex calculations, and more on deciding what to do with your money. Here we're going to take a look at how retirement calculators work and how they can help you to adequately plan for your future.The driving force that makes investing for retirement so powerful over the long run is the concept of compound interest. Compound interest is the idea that after one year you'll gain interest on your initial investment, and you will gain even more interest on that first year's interest for every year after that. While compound interest is a somewhat complicated mathematical concept, you can just use retirement calculators to deal with all of the math for you. When using a retirement calculator, you'll usually need to know how much you're investing, at what interest rate you're investing it for, as well as how long you plan to invest. A more complicated retirement calculator might also allow you to compensate for inflation, taxes, and other expenses.So let's take a look at some example calculations using a retirement calculator set for 5% yearly compound interest. Suppose starting in 2000, George invests $1000 each year through 2009, and then doesn't add any more money to his investment portfolio. This means that he's put in $10,000 total. Also starting in 2000, Janice invests $1800 each year, but 2004 is the final year she invests. So Janice has invested a total of $9000, but she invested her money earlier than George. After the year 2030 is finished, who will have the most money in their retirement fund? The answer is that George will have $35,040, but Janice will have slightly more at $35,370.
Suppose that you plan on investing into an account paying simple interest The formula for simple interest is I equals Prt where I is the interest earned on a investment of P dollars at the given rate?
No. I is as described for the stated period.
What are the methods for accounting inflation?
Discuss the various methods of inflation accounting.
Something about Florida that starts with letter r?
retirement homes, rides (as in Disney :] ), really hot... or "really" anything i suppose, are you doing an acrostic poem?
Is inflation harmful?
Too much inflation will ruin the economy but small levels of inflation will spur growth. Inflation is very harmful to any economy because it can ruin the economy's development and growth and this is not suppose to be. Inflation is also very harmful to any economy because the people living in that economy might not survive the situation and this is when you see that an economy is affected and if nothing is done to it, it can cause an economy to collapse.
Suppose a movie ticket costs 7 dollars and inflation causes tickets to increase 4.5 percent a year for 5 years?
i no help you with ur math hw.
How is State Teachers Retirement System credit calculated for adult education teachers for time worked during summer school or is it?
I think it is suppose to be. Call them and ask.
Do the legislative branch represent people interest?
It is suppose to , but sometimes it seems they are only concerned with their agenda and not the common good of the people.
What positive effects of inflation can be listed?
It can benefit the inflators (those responsible for the inflation)It be benefit early and first recipients of the inflated money (because the negative effects of inflation are not there yet).It can benefit the cartels (it benefits big cartels, destroys small sellers, and can cause price control set by the cartels for their own benefits).It might relatively benefit borrowers who will have to pay the same amount of money they borrowed (+ fixed interests), but the inflation could be higher than the interests, therefore they will be paying less money back. (example, you borrowed $1000 in 2005 with a 5% fixed interest rate and you paid it back in full in 2007, let's suppose the inflation rate for 2005, 2006 and 2007 has been 15%, you were charged %5 of interests, but in reality, you were earning %10 of interests, because 15% (inflation rate) -- 5% (interests) = %10 profit, which means you have paid only 70% of the real value in the 3 years. Note: Banks are aware of this problem, and when inflation rises, their interest rates might rise as well. So don't take out loans based on this information.Many economists favor a low steady rate of inflation, low (as opposed to zero or negative) inflation may reduce the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reducing the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.Tobin effect argues that: a moderate level of inflation can increase investment in an economy leading to faster growth or at least higher steady state level of income. This is due to the fact that inflation lowers the return on monetary assets relative to real assets, such as physical capital. To avoid inflation, investors would switch from holding their assets as money (or a similar, susceptible to inflation, form) to investing in real capital projects.
