Cole Puts Money into an Account

question 43

Multiple Choice

Cole puts money into an account. One year later, he sees that he has 4 percent more dollars and that his money will buy 3 percent more goods. Which of the following is consistent with these facts?

• A) The nominal interest rate was 4 percent, and the inflation rate was 1 percent.
• B) The nominal interest rate was 4 percent, and the inflation rate was 7 percent.
• C) The nominal interest rate was 7 percent, and the inflation rate was -7 percent.
• D) The nominal interest rate was 1 percent, and the inflation rate was -1 percent.

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Definitions:

Political Party Machines

Political entities in the 19th and early 20th centuries that controlled party nominations and patronage, often through corruption and favoritism, to maintain power.

Spoils System

The term meaning the filling of federal government jobs with persons loyal to the party of the president; originated in Andrew Jackson’s first term.

Whigs

A political faction and then a formal party in the parliaments of England, Great Britain, Ireland, and the United Kingdom, that was influential from the 1680s to the 1850s, advocating for parliamentary supremacy and opposed to the royal prerogative.

Spoils System

A practice where political party leaders give government jobs to their supporters as a reward for their assistance in achieving victory.