Suppose the Annual Nominal Interest Rate Is 10 Percent and the Inflation

question 73

Multiple Choice

Suppose the annual nominal interest rate is 10 percent and the inflation rate is 4 percent. If you deposit $1,000, at the end of the year you'll have earned a real rate of interest of:

• A) 4 percent.
• B) 6 percent.
• C) 10 percent.
• D) 14 percent.

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Definitions:

Terrestrial Planets

Planets that are primarily composed of silicate rocks or metals, with a solid surface, similar to Earth.

Gas Giants

Large planets composed mostly of hydrogen and helium gases, with a small rocky core, notably including Jupiter and Saturn in our solar system.

Crater

A bowl-shaped depression formed by the impact of a meteorite or volcanic activity.

Meteoroid

A small particle from a comet or asteroid that is in the solar system and that could enter the Earth's atmosphere, becoming a meteor.