Which of the Following Statements Concerning the Measurability of Interest

question 2

Multiple Choice

Which of the following statements concerning the measurability of interest rates is true?

• A)Information on nominal interest rates is available to the Fed with a two-week lag.
• B)The relevant interest rates are instantaneously measurable by the Fed.
• C)The Fed is more interested in measuring the nominal interest rate than in measuring the real interest rate.
• D)The Fed is unable to continuously measure the real interest rate.

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Definitions:

Compounded Semiannually

The calculation of interest where the interest earned over a period is added to the principal, and the process is repeated twice a year.

Gross Debt Service Ratio

A financial ratio that compares an individual's monthly housing costs (including mortgage payments, property taxes, and utilities) to their gross monthly income, used by lenders to assess borrowing capacity.

Gross Monthly Income

The total amount of income earned in a month before taxes and deductions.

Compounded Monthly

Interest or returns on an investment are calculated and added to the principal amount every month.