Question : 51) To convert the nominal interest rate to the real : 1240922

51) To convert the nominal interest rate to the real interest rate, we

A) divide the nominal interest rate by the inflation rate.

B) multiply the nominal interest rate by the inflation rate.

C) subtract the inflation rate from the nominal interest rate.

D) add the inflation rate to the nominal interest rate.

E) subtract the nominal interest rate from the inflation rate and then multiply by 100.

52) The real interest rate equals the

A) nominal interest rate multiplied by 100.

B) nominal interest rate divided by 100.

C) nominal interest rate minus the inflation rate.

D) inflation rate minus the nominal interest rate.

E) nominal interest rate divided by the inflation rate and then multiplied by 100.

53) If the inflation rate is greater than the nominal interest rate, then the

A) real interest rate will be negative.

B) real interest rate will be positive.

C) inflation rate will increase.

D) inflation rate will decrease.

E) nominal interest rate will be negative.

54) If the nominal interest rate is greater than the real interest rate,

A) it is an indication of economic growth.

B) inflation must be occurring.

C) lenders must lose because they can only make loans using the real interest rate.

D) the real interest rate must be negative.

E) None of the above answers is correct because it is not possible for the nominal interest rate to exceed the real interest rate.

55) The real interest rate is negative if the inflation rate

A) exceeds the nominal interest rate.

B) exceeds the real interest rate.

C) is equal to the nominal interest rate.

D) is less than the nominal interest rate.

E) equals zero.

56) Which of the following is true?

A) The real interest rate is always positive.

B) The nominal interest rate is usually negative.

C) The real interest rate can be negative.

D) The real interest rate can never be zero.

E) The nominal interest rate is usually less than the real interest rate.

57) If the CPI is 170 at the beginning of the year and 181 at the end, and a bank is paying a nominal interest rate of 6 percent, we see that

A) the real interest rate is negative.

B) the interest nominal rate is negative.

C) the real interest rate is positive and is less than 1 percent.

D) the real interest rate is positive and is larger than 1 percent.

E) the real interest rate is equal to zero.

58) If the bank returns $1,060 on the $1,000 deposited for a year during which inflation was 4 percent, the real interest rate is

A) 6 percent.

B) 10 percent.

C) -2 percent.

D) 2 percent.

E) 16 percent.

59) Citicorp charges an 11 percent interest rate on all new car loans. If the inflation rate is 6 percent, Citicorp receives a real interest rate of

A) 11 percent.

B) 6 percent.

C) 1.83 percent.

D) 5 percent.

E) 0.54 percent.

60) Chloe has a $15,000 personal loan at a nominal interest rate of 8 percent. If the inflation rate is 3 percent, what is the real interest rate paid on the loan?

A) 8 percent

B) 5 percent

C) 11 percent

D) 3 percent

E) 2.67 percent