If the Annual Real Rate of Interest Is 2

question 2

Multiple Choice

If the annual real rate of interest is 2.5%, and the expected inflation rate is 3.7%, the nominal rate of interest would be approximately

• A) 3.7%.
• B) 6.2%.
• C) 2.5%.
• D) -1.2%.

---

Definitions:

Departmentalization

The grouping of jobs into working units usually called departments, units, groups, or divisions.

Dissatisfaction

A feeling of unhappiness or discontentment arising from unmet expectations or experiences.