If the Nominal Interest Rate Is 5

question 20

Multiple Choice

If the nominal interest rate is 5.6 percent and the rate of inflation is 7.1 percent in a given year,then what is the corresponding real rate of return?

• A)12 .7 percent
• B)1.5 percent
• C)-1.5 percent
• D)-12.7 percent

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Definitions:

Exhalation

The process of breathing out carbon dioxide and other gases from the lungs to the atmosphere.

Diffusion

The movement of molecules or particles from an area of higher concentration to an area of lower concentration, a process that occurs until equilibrium is reached.

Respiratory Cycle

The process involving inhalation and exhalation of air through the respiratory system, facilitating gas exchange with the environment.

Inhalation Steps

The process involved in the act of breathing in, where air moves from the external environment into the lungs.