The Nominal Interest Rate

question 118

Multiple Choice

The nominal interest rate:

• A)varies directly with the rate of expected inflation in an economy.
• B)is the interest rate expressed in dollars of constant purchasing power.
• C)equals the difference between the real interest rate and the inflation rate.
• D)is the basis for decisions taken by the lenders and the borrowers in an economy.
• E)is the percentage increase in the average price level from one year to the next.

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Definitions:

Year 2

A term that indicates the second year in a series, often used in financial and operational planning to distinguish between different time periods.

Accounts Receivable Turnover

A financial ratio that measures how many times a company can turn its accounts receivable into cash within a period.

Year 2

A reference to the second year of operation, study, or observation, the specifics of which depend on the context.

Current Ratio

An indicator of how well a company can fulfill its short-term financial obligations within a year, calculated by the division of current assets by current liabilities.