Difference between nominal interest and real interest rate

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Reference no: EM1311122

1 A. Would you rather earn a 4 % nomical or 4% real interest rate? Explain by describing the difference between nominal and real variables.

B.Suppose that inflatiion evarages 3% over the next few years. Would ou rather experience a constant 3% inflation or an inflation that was randomly 2% or 4% explain?

2.When the federal reserve rears that inflation is imminent, the fed tends to push up interest rates which leads to higher unemployment rates.Does the Fed not care what jobs are lost? Explain

Reference no: EM1311122

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