The Real Interest Rate Is 3% and the Inflation Rate

question 70

Multiple Choice

The real interest rate is 3% and the inflation rate is 5%. What is the nominal interest rate?

• A) 3%
• B) 5%
• C) 8.15%
• D) 2%

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Definitions:

Liability

An obligation or debt that a company owes to others, which must be settled through the transfer of assets or services.

Expense

An economic outflow or the consumption of resources resulting from the operations of a business.

Creditor

An individual, financial institution, or company to whom money is owed by a debtor or borrower.

Asset

An asset represents a resource that is owned or controlled by the company with the expectation that it will provide future economic benefits.