Assignment 4
Next we begin putting things together. First a short review of nominal and real interest rates. Remember the nominal interest rate is what the bank charges, the real interest rate is the nominal interest rate minus inflation.
Example: If the bank charges you 6% interest and the Inflation rate during the term of the loan is 4%, then the real interest rate is 2%
6 (the nominal interest rate) - 4 (the inflation rate) = 2 ( the real interest rate).
Next we use the tools of the FED to have an effect on the Aggregate Supply and Aggregate Demand model. Practice on the worksheet.
Pages 657-659 in the textbook
Pages 88-89 in the $5 notes
documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3Aa5a75fe2-4309-499b-8205-2a1436a11b7e
Example: If the bank charges you 6% interest and the Inflation rate during the term of the loan is 4%, then the real interest rate is 2%
6 (the nominal interest rate) - 4 (the inflation rate) = 2 ( the real interest rate).
Next we use the tools of the FED to have an effect on the Aggregate Supply and Aggregate Demand model. Practice on the worksheet.
Pages 657-659 in the textbook
Pages 88-89 in the $5 notes
documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3Aa5a75fe2-4309-499b-8205-2a1436a11b7e