If the Nominal Interest Rate Is 5 Percent and the Rate

question 256

Multiple Choice

If the nominal interest rate is 5 percent and the rate of inflation is 2 percent, then the real interest rate is

• A)7 percent.
• B)3 percent.
• C)2.5 percent.
• D).4 percent.

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Definitions:

European Recovery Plan

more widely known as the Marshall Plan, was an American initiative passed in 1948 for foreign aid to Western Europe, aiming to rebuild war-torn regions, remove trade barriers, modernize industry, and improve European prosperity.

George C. Marshall

An American military leader and statesman known for his leadership during World War II and for the post-war European recovery plan that bears his name, the Marshall Plan.

American Public

Refers to the general population of the United States or their collective attitudes and opinions.

Atomic Bomb

A weapon of mass destruction that utilizes nuclear reactions, specifically fission or a combination of fission and fusion, to release a large amount of energy.