Which of the Following Statements Is Correct

question 77

Multiple Choice

Which of the following statements is correct?

• A)If the rate of inflation is high,the nominal rate of interest must be low.
• B)If the rate of inflation is less than the nominal interest rate,the real interest rate is positive.
• C)If the real interest rate is less than the nominal interest rate,inflation must be zero.
• D)If the real interest rate is less than the nominal interest rate,inflation must be negative.
• E)If the nominal interest rate is high,the real interest rate must be high.

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Definitions:

Liabilities

Financial obligations or debts owed by a business to external organizations or individuals.

Accrued Revenues

Assets (receivables) created when revenues are earned, but cash will be collected from customers in the future; created at end of period during the adjustment process to reflect the amount of revenue earned by providing goods or services over time to customers who will pay in the future.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the owners' claim on the company assets.

Assets

Resources owned by a company from which future economic benefits are expected to flow to the company.