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# Suppose that a class of 20 students participates in the Interest Rates and Investment

Suppose that a class of 20 students participates in the Interest Rates and Investment Experiment. The table below shows the nominal rates of return on the projects assigned to the ten borrowers in Round 1 of a particular variation of the experiment.

 Borrower Nominal Rate ofReturn on Project (%) Ayon 8.6 Barb 7.8 Carlos 7.0 Darius 6.2 Ellen 5.4 Fay 4.6 Grace 3.8 Habeeb 3.0 Ida 2.2 Jack 1.4

In Round 1, the nominal T-bill interest rate is 4.8%.
5.3.   Supply and demand analysis predicts what nominal interest rate for the loans between borrowers and lenders?

 A. Interest rates of 4.8% or slightly higher B. Interest rates of 1.4% or slightly higher C. Any interest rate up to but no more than 4.8% D. Any interest rate up to but no morethan 7.8% E. Any interest rate up to but no more than 1.4%

Apr 26 2018 View more View Less