Initially the Nominal Interest Rate Is 8 Percent and the Inflation

question 62

Multiple Choice

Initially the nominal interest rate is 8 percent and the inflation rate is 5 percent. People know that the inflation rate increases to 10 percent. What is the new nominal interest rate?

• A) 3 percent
• B) 11 percent
• C) 8 percent
• D) 13 percent

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Definitions:

Prison Population

The total number of individuals incarcerated in a prison system at a given time.

Decreasing Rate

A situation where the rate at which a value or quantity is reduced increases over time.

Canada Savings Bond

A secure investment product offered by the Government of Canada that provides a guaranteed interest rate over a fixed period.

Maturity Value

The total amount payable to an investor at the end of a fixed-term investment, including the principal and the interest.