Suppose the Nominal Annual Interest Rate on a Two Year

question 45

Multiple Choice

Suppose the nominal annual interest rate on a two year loan is 16 percent and lenders expect inflation to be 10 percent in each of the two years.The annual real rate of interest is:

• A)12 percent.
• B)16 percent.
• C)4 percent.
• D)6 percent.

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The situation in which an individual is not subject to overbearing restrictions by power figures on their lifestyle, behavior, or political thought.

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