1. If the supply of loanable funds decreases, all else equal we would expectInterest rates to

remain unchanged

Interest rates to increase

Interest rates to decrease

The price of money to remain unchanged

2. If inflation is anticipated to be 5 percent during the next year, while the real rate of interest for a one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan?

3. Suppose you are a financial manager at a manufacturing company that is going to make a five-year loan to a key supplier.  The inflation rate over the next five years is expected to be 2, 3, 4, 5, and 6 percent.  If the real rate of interest is 6 percent, what is the nominal rate on this loan?

for the question 2, 3. if possible, pls write the processes. thank you so much

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"