The Nominal Rate of Interest Is 6% and the Anticipated

question 151

Multiple Choice

The nominal rate of interest is 6% and the anticipated rate of inflation is 2%. What is the real rate of interest?

• A) 8%
• B) 6%
• C) 4%
• D) 2%

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Definitions:

Total Variable Cost

The sum of all costs that vary with the output level in the production of goods or services.

Total Fixed Cost

The cumulative total of all costs that do not alter in response to the quantity of production or output.

Average Variable Cost

The cost of each unit variable, determined by dividing the overall variable costs by the produced output quantity.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's production increases.