During a Certain Year,the Consumer Price Index Increased from 120

question 83

Multiple Choice

During a certain year,the consumer price index increased from 120 to 132 and the purchasing power of a person's bank account increased by 4 percent.For that year,

• A)the nominal interest rate was 6 percent.
• B)the nominal interest rate was 14 percent.
• C)the inflation rate was 12 percent.
• D)the inflation rate was 9 percent.

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Definitions:

Treasury Bond Market

The marketplace where U.S. government bonds with maturities greater than ten years are issued and traded.

Spread

The difference between the purchase price and the sale price of a security, or the difference between the bid and ask prices.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for financing payroll, accounts payable, and other short-term liabilities.

Maturity

Maturity refers to the date on which the principal or final payment is due on a debt instrument, after which the debt is considered repaid.