The CPI is 120 in year 1 and 150 in year 2. All inflation is anticipated. If Gringotts Bank charges an interest rate of 20.00 percent in year 2, the bank's real interest rate is nothing%. (Round your response to two decimal places and include a minus sign if necessary.)

the inflation rate between year 1 and year 2 = [(CPI year 2 - CPI year 1) / CPI year 1] x 100 = [(150 - 120) / 120] x 100 = (30 / 120) x 100 = 0.25 x 100 = 25%

Gringotts Bank real interest rate = 20% - 25% = -5%

since the interest rate is negative, that means that Gringott Bank is actually losing money by lending it at 20% since the inflation rate is much higher.

andromache andromache · Answer 2 · 2022-03-03T14:14:52+01:00

The bank's real interest rate is -5%.

Calculation of the bank real interest rate:

Since we know that

real interest rate = nominal interest rate - inflation rate

Here, the nominal interest rate is 20%

And, the inflation rate is

= [(CPI year 2 - CPI year 1) / CPI year 1] x 100

= [(150 - 120) / 120] x 100

= (30 / 120) x 100

= 0.25 x 100

= 25%

So, the real interest rate is

= 20% - 25%

= -5%

Therefore, we can conclude that the The bank's real interest rate is -5%.

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The CPI is 120 in year 1 and 150 in year 2. All inflation is anticipated. If Gringotts Bank charges an interest rate of 20.00 percent in year​ 2, the​ bank's real interest rate is nothing​%. ​(Round your response to two decimal places and include a minus sign if necessary.​)

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Calculation of the bank real interest rate:

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The CPI is 120 in year 1 and 150 in year 2. All inflation is anticipated. If Gringotts Bank charges an interest rate of 20.00 percent in year 2, the bank's real interest rate is nothing%. (Round your response to two decimal places and include a minus sign if necessary.)