The Nominal Interest Rate Is

question 82

Multiple Choice

The nominal interest rate is

• A)determined by the forces of supply and demand in the consumer goods market.
• B)the interest rate in current dollars, unadjusted for inflation.
• C)higher than the real interest rate even if the expected inflation rate is zero.
• D)lower than the real interest rate even if the expected inflation rate is zero.
• E)b and d

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Definitions:

Economic Benefit

The advantage or gain received from a financial transaction or situation, which may have tax implications or influence fiscal decisions.

Nontaxable Return of Capital

A payment received from an investment that is not taxed because it is considered a portion of the original investment's cost being returned to the investor.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders.

Earnings and Profits

A measure of a corporation’s ability to pay dividends to shareholders, not necessarily equal to net income.