Over the Past Year, You Earned a Nominal Rate of Interest

question 1

Multiple Choice

Over the past year, you earned a nominal rate of interest of 8% on your money.The inflation rate was 3.5% over the same period.The exact actual growth rate of your purchasing power was

• A)15.55%.
• B)4.35%.
• C)5.02%.
• D)4.81%.

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Definitions:

Absolute Income Gap

The difference in total income or earnings between individuals, households, or countries, measured without adjusting for living costs or other factors.

Real Income Per Capita

The average income per person in a country, adjusted for inflation, which reflects the purchasing power and economic well-being of the population.

Growth Rate

The percentage change of a specific variable within a specified time period, often used to describe the increase in population, revenue, or other significant measures.

Life Expectancy

The average number of years an individual is expected to live, based on current mortality rates and health conditions.