If the Nominal Interest Rate Is 6 Percent and the Rate

question 388

Multiple Choice

If the nominal interest rate is 6 percent and the rate of inflation is 4 percent, then the real interest rate is

• A)-4 percent.
• B)2 percent.
• C)4 percent.
• D)8 percent.

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity results in an irrational decision-making outcome.

Heuristics

Cognitive shortcuts or rules of thumb that simplify decision making, often leading to quick but sometimes inaccurate judgments or predictions.

Decision-making Biases

Systematic errors in thinking that affect the decisions and judgments that people make.

Persuasive Argument Theory

A theory suggesting that the process of persuasion involves the presentation of arguments, which leads to attitude change when the arguments are received and accepted by an individual.