If the Nominal Interest Rate Is 8 Percent and Expected

question 109

Multiple Choice

If the nominal interest rate is 8 percent and expected inflation rate is 9 percent, the real interest rate

• A)is 1 percent.
• B)is -1 percent.
• C)is 9 percent.
• D)cannot be calculated.
• E)none of the above

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Definitions:

Wisdom Of Crowds

The collective opinion of a group of individuals rather than a single expert, often more accurate than the majority of individual opinions.

Diversity Of Opinion

The presence of varying viewpoints and perspectives within a group or discussion.

Chief Executive Officer

The highest-ranking executive in a company or organization, responsible for making major corporate decisions, managing the overall operations and resources, and serving as the main point of communication between the board of directors and corporate operations.

Risky Shift

A tendency for groups to take greater risks than the same individuals (on average) would have decided to take individually.