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- Suppose that your bank pays 4% interest per year on your savings account. Each $100 in the banks grows to $104 over a one-year period. If prices increase by 3% per year, how much do you really gain by keeping $100 in the bank for a year.The central bank is selling $100 worth of bonds payable in one year. The price it gets today is $98. What is the implicit interest rate? (If you get 0.0112, please write 1.12)The central bank is selling $100 worth of bonds payable in one year. The price it gets today is $98. What is the implicit interest rate? (If you get 0.0112, please write 1.12)
- Your firm is based in the UK, just received USD 825,000 from a customer in the U.S., and wants to convert the USD to GBP. The bank is quoting a spot rate of GBP/USD 1.2283 - 1.2425. How much will you receive in British pounds (GBP)? A. GBP 1,013,348 B. GBP 663,984 C. GBP 671,660 D. GBP 1,025,063If the price of a one year T-Bill is $2,860 and the value at maturity is $3,000, what would be the yield(interest rate)?Suppose you purchase a $1,500 TIPS on January 1, 2020. The bond carries a fixed coupon rate of 5.5 percent. Over the first two years, semiannual inflation is 1.5 percent, 1.5 percent, 4 percent, and 3 percent, respectively. What is the principal at the end of month 6?
- Suppose the velocity of circulation (V) is constant. The annual growth rate of real GDP is 3%. The money supply grows by 5% per year. Suppose the nominal interest rate is 1%, how much is the real interest rate?Economics Suppose that on January 1, 2022, the price of a one-year Treasury bill with a face value of $1,000-is $926,78 Investors expect that the inflation rate will be 4% during 2022, but at the end of the year, the inflation rate turns out to have been 1%. The nominal interest rate on the bill (measured as the yield to maturity) is% (Round your response to two decimal places)Suppose that on January 1, 2023, the price of a one-year Treasury bill with a face value of $1,000 is $940.01. Investors expect that the inflation rate will be 3% during , but at the end of the year, the inflation rate turns out to have been 2%. he nominal interest rate on the bill (measured as the yield to maturity) is enter your response here %. (Round your response to two decimal places.)
- South Africa, March 18 ‐ Repurchase rate: 6.25% Inflation rate: 4.5% (January) Based on the projections of the repurchase rate in the extract above. Explain, with the aid of a graph, the impact of a cut in the interest rate on the demand for money.Suppose that the real money demand function is L(Y,r+πe)=0.3Y÷ (r+πe) Where Y is real output, r is the real interest rate, and πe is the expected rate of inflation. Real output is constant over time at Y = 1500. The real interest rate is fixed in the goods market at r = 0.5 per year. Suppose that the nominal money supply is growing at the rate of 10% per year and that this growth rate is expected to persist for ever. Currently, the nominal money supply is M = 400. What are the values of the real money supply and the current price level? (Hint: What is the value of the expected inflation rate that enters the money demand function?). Suppose that the nominal money supply is M = 400. The Bank of Namibia announces that from now on the nominal money supply will grow at the rate of 5% per year. If everyone believes this announcement, and if all markets are in equilibrium, what are the values of real money supply and the current price level? Explain the effects on the…Suppose the real interest rates in the United States and Switzerland are both 2%. Now suppose that the Federal Reserve in the United States conducts monetary policy that in turn raises domestic interest rates. Assume there are no policy changes in Switzerland and that their real interest rates stay steady at 2%.
