Suppose That at the Target Inflation Rate of 2

question 89

Multiple Choice

Suppose that at the target inflation rate of 2.5 percent the nominal interest rate is 4 percent. This means that at the target inflation rate, the central bank wants the real interest rate to equal

• A)6.5 percent.
• B)4.0 percent.
• C)2.5 percent.
• D)1.5 percent.
• E)Not enough information is given to answer this question.

---

Definitions:

Declaration of Independence

The document adopted on July 4, 1776, by which the thirteen American colonies declared their independence from British rule.

Enlightenment

An intellectual and philosophical movement that dominated the world of ideas in Europe during the 17th and 18th centuries, emphasizing reason, individualism, and skepticism of traditional doctrines.

Boston Massacre

Clash between British soldiers and a Boston mob, March 5, 1770, in which five colonists were killed.

Sons of Liberty

A group of colonial American patriots who organized against the British government prior to the American Revolution, protesting against taxation without representation.