Homework Answers
Answer:
Real interest rate = Nominal interest rate - inflation rate
The real interest rate in US is -1% and in the UK is 2%.
Explanation: US: Real interest rate = 7-8 = -1% and UK: Real interest rate = 5-3 = 2%
Investment flows from the
United States to the United
Kingdom
Explanation: Because real interest rate is higher in the
UK
As a result of these investment flows, the dollar would depreciate against the pound.
Explanation: Due to investment flow to the UK, demand for dollar will decrease so dollar will depreciate
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The following table shows the average nominal interest rates on six-month Treasury bills between 1971 and...
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six-month Treasury bills between 1971 and 1975, which determined
the nominal interest rate that the U.S. government paid when it
issued debt in those years. The table also shows the inflation rate
for the years 1971 to 1975. (All rates are rounded to the nearest
tenth of a percent.)
Year
Nominal Interest Rate
Inflation Rate
(Percent)
(Percent)
1971
4.5
4.2
1972
4.5
3.3
1973
7.2
6.3
1974
8.0
11.0
1975...
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The following table shows the average nominal interest rates on
six-month Treasury bills between 1971 and 1975, which determined
the nominal interest rate that the U.S. government paid when it
issued debt in those years. The table also shows the inflation rate
for the years 1971 to 1975. (All rates are rounded to the nearest
tenth of a percent.)
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(Percent)
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11.0
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