Answer to Question #13778 in Economics of Enterprise for Kambungo

Question

1. What is the current inflation rate and nominal interest rate?
2. What will happen in ( 1.) if money supply increases by 15%?

Answer 1

1. current inflation rate& - is the percentage increase in the price of goods and services, usually annually.
nominal interest rate:
In finance and economics, nominal interest rate or nominal rate of interest refers to two distinct things: the rate of interest before adjustment for inflation or, for interest rates "as stated" without adjustment for the full effect of compounding (also referred to as the nominal annual rate). An interest rate is called nominal if the frequency of compounding (e.g. a month) is not identical to the basic time unit (normally a year).

2. If money supply increases by 15%, these two indexes also increase