DaRealistG1583 DaRealistG1583

09-03-2020
Business

contestada

A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned.

Respuesta :

jepessoa jepessoa

14-03-2020

Answer:

inflation

Explanation:

The real interest rate charged on a loan = nominal interest rate - inflation rate

The inflation rate is the change in the general level of prices, and as the inflation rate increases, the purchasing power of the currency decreases. For example, if you purchase 50 cans of Coke with $50 this year, and the inflation rate is 10%, you will only be able to purchase only 45 cans next year with the same $50.

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