If the Nominal Interest Rate Is 4 Percent and the Real

question 122

Multiple Choice

If the nominal interest rate is 4 percent and the real interest rate is 7 percent,then the inflation rate is

• A)-3 percent.
• B)0.75 percent.
• C)3 percent.
• D)11 percent.

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Definitions:

Null Hypothesis

A hypothesis that assumes no statistical significance exists in a set of given observations and that any observed difference is due to chance.

T = 1.965

A specific value often used in statistical analysis, particularly in hypothesis testing, where it represents a critical value in a t-distribution.

Critical Value

A point on the test distribution that is compared with the test statistic to decide whether to reject the null hypothesis.

α

Denotes the level of significance in hypothesis testing, commonly set at 0.05, indicating a 5% risk of concluding an effect exists when it does not.