If the Nominal Interest Rate Is 10 Percent and the Real

question 16

Multiple Choice

If the nominal interest rate is 10 percent and the real interest rate is 6 percent,

• A)The expected rate of inflation is 4 percent.
• B)The expected rate of inflation is 6 percent.
• C)Real GDP must exceed nominal GDP.
• D)Nominal GDP equals real GDP.

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Definitions:

Digestion

The biological process by which the body breaks down food into absorbable forms for energy, growth, and cell repair.

Neurons

Specialized neurons in the nervous system that communicate information via electrical and chemical signals.

Networks

Systems of interconnected people, computers, or other entities through which information, resources, and communications are exchanged.

Behaviour

Actions or reactions of an individual, in response to external or internal stimuli.