If the Nominal Interest Rate Is 4 Percent and the Expected

question 64

Multiple Choice

If the nominal interest rate is 4 percent and the expected inflation rate is 1.5 percent,the real interest rate is

• A) 3.5 percent.
• B) 5.5 percent.
• C) 4 percent.
• D) 2.5 percent.
• E) 0.25 percent.

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Definitions:

Predicted Amount

The value estimated based on a model or regression equation representing the expected outcome.

Dollars

A unit of currency used in various countries, typically represented by the symbol $.

Simple Linear Regression

A statistical method that models the linear relationship between a dependent variable and one independent variable.

Standard Error of Estimate

Indicates the average distance that the observed values fall from the regression line, measuring the accuracy of predictions.