If You Expect the Inflation Rate to Be 12 Percent

question 32

Multiple Choice

If you expect the inflation rate to be 12 percent next year and a one-year bond has a yield to maturity of 7 percent,then the real interest rate on this bond is

• A)-5 percent.
• B)-2 percent.
• C)2 percent.
• D)12 percent.

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Definitions:

Oval Window

Membranous structure to which the stapes attaches; transmits vibrations to the inner ear.

Optic Chiasma

A part of the brain where the optic nerves partially cross, playing a crucial role in the visual system by combining visual information from each eye.

Optic Nerve

The nerve that transmits visual information from the retina to the brain.

Visual Cortex

Area in the occipital lobe of the cerebral cortex that integrates visual information and produces the sensation of vision.