Suppose That the Rate of Inflation Is 6% Per Year

question 55

Multiple Choice

Suppose that the rate of inflation is 6% per year and the nominal interest rate for the year is 9%. The real rate of interest is _____.

• A) 15%
• B) 3%
• C) 9%
• D) 6%

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Definitions:

General Partner

A member of a partnership who has unlimited liability and is actively involved in managing the business.

Limited Partner

An investor in a partnership who has limited liability to the extent of their investment in the business and does not participate in day-to-day management.

Limited Partnership

A business partnership where at least one partner has limited liability to the extent of their investment while at least one other has unlimited liability.

General Partners

Individuals in a partnership who are responsible for the management of the partnership and are liable for its debts.