The Real Interest Rate

question 111

Multiple Choice

The real interest rate

• A) equals the nominal rate minus the prime rate.
• B) increases as inflation increases,ceteris paribus.
• C) is what you really pay if you borrow versus what you think you are paying.
• D) equals the nominal rate plus the rate of inflation.
• E) equals the nominal rate minus the rate of inflation.

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Definitions:

Principle of Utility

A philosophical principle asserting that the best action is the one that maximizes overall happiness or pleasure and minimizes overall pain or harm.

Particular Acts

Refers to specific actions taken by individuals or groups, often analyzed in ethical, legal, or social contexts to determine their morality or impact.