Which of the Following Combinations of Real Interest Rates and Inflation

question 52

Multiple Choice

Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 7 percent?

• A)a real interest rate of 2.5 percent and an inflation rate of 2 percent
• B)a real interest rate of 4 percent and an inflation rate of 11 percent
• C)a real interest rate of 6 percent and an inflation rate of 1 percent
• D)a real interest rate of 5.5 percent and an inflation rate of 3 percent

---

Definitions:

Inhibition

A psychological or physiological process that reduces or suppresses the response to stimuli.

Spontaneous Recovery

A conditioned response that had been extinguished reoccurs after there has been a time without exposure to the conditioned stimulus.

Conditioned Response

A learned reaction to a previously neutral stimulus that has become associated with an unconditioned stimulus through conditioning.

Unconditioned Stimulus

In the context of classical conditioning, a stimulus which innately and automatically induces a response without the necessity of prior education.