If the Nominal Interest Rate Is 5 Percent and Inflation

question 222

Multiple Choice

If the nominal interest rate is 5 percent and inflation is 3 percent, the real interest rate is:

• A)0 percent.
• B)2 percent.
• C)8 percent.
• D)15 percent.

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Definitions:

Self-Actualization

The achievement or actualization of one's abilities and potentials, seen as a desire or necessity inherent in all individuals.

Self-Efficacy

An individual’s belief in their capacity to execute behaviors necessary to produce specific performance attainments, reflecting confidence in the ability to exert control over one's own motivation and social environment.

Relatedness

A psychological term that describes the feeling of connection or bond with others, affecting motivation and well-being.

Extrinsic Motivation

A form of motivation driven by external rewards, such as money, fame, grades, and praise, or the avoidance of negative outcomes.