If the Expected Inflation Rate Is 4 Percent and the Nominal

question 32

Multiple Choice

If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent,the expected real interest rate is _____.

• A)13 percent
• B)−5 percent
• C)9 percent
• D)−13 percent
• E)5 percent

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Definitions:

Long Run

A period where all factors of production and costs are variable and no inputs are fixed.

Unemployment

The condition of being jobless and actively seeking employment, reflecting the number of people in the workforce unable to find jobs.

Government Measure

Actions or initiatives taken by a government to regulate, control, or influence a particular aspect of the economy or society.

Construction

The process of building or assembling infrastructure, including the planning, design, and financing, continuing until the project is ready for use.