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

question 49

Multiple Choice

Over the past year, you earned a nominal rate of interest of 9% on your money. The inflation rate was 3% over the same period. The exact actual growth rate of your purchasing power was

• A) 15.5%.
• B) 10.0%.
• C) 5.8%.
• D) 4.8%.
• E) 15.0%.

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Definitions:

Achieve

To successfully reach a desired or intended goal through effort, skill, or courage.

Marginal Cost

The heightened cost involved in the production of one additional product or service unit.

Marginal Benefits

The supplementary benefit or enjoyment a person gets by consuming another unit of a good or service.

Rational Choice

The theory in economics and sociology that suggests individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.