Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.9% at a time when inflation is around 1.2?%.For the average saver, the real rate of interest on his or her savings is %.?(Round your response to two decimal places and use a minus sign if necessary?.) If banks expect that the rate of inflation in the coming year will be 4.2?% and they want a real return of 8.5?%on a certain category of? loans, then the nominal rate they should charge borrowers on those loans is ? (round response to two decimal places.)

1.  - 0.02%.

2. 12.7%

Explanation:

Suppose the average rate paid by banks on savings accounts is 0.9% at a time when inflation is around 1.2?%.

For the average saver, the real rate of interest on his or her savings is - 0.02%.

The real rate is derived from the nominal rate minus the inflation rate which is 0.9% - 1.2% = - 0.02%

If banks expect that the rate of inflation in the coming year will be 4.2% and they want a real return of 8.5%on a certain category of loans, then the nominal rate they should charge borrowers on those loans is 12.7%

As stated above, The real rate is derived from the nominal rate minus the inflation rate which in this case

Nominal Rate = Real rate + Inflation Rate. i.e. 8.5% + 4.2% = 12.7%

answer; im thinking the correct answer is (7years);

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.