If People Expect an Inflation Rate of 3

question 255

Multiple Choice

If people expect an inflation rate of 3.3 percent, and the real interest rate is 3 percent, the nominal interest rate equals (approximately)

• A) 8.6 percent.
• B) 6.3 percent.
• C) 9.9 percent.
• D) 0.3 percent.

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Definitions:

Commerce Clause

A provision in the United States Constitution giving Congress the power to regulate commerce with foreign nations, and among the several states.

Preemption Doctrine

The principle that federal law can supersede or override state law in areas expressly reserved for federal regulation or where there is a conflict.

Sales Tax

A tax imposed by governments on sales transactions, typically calculated as a percentage of the sale price of goods and services.

Internet Transactions

Commercial operations carried out online, including buying, selling, and the exchange of services or information.