If the Real Rate of Return Is 2 Percent and the Inflation

question 118

Multiple Choice

If the real rate of return is 2 percent and the inflation rate is 0 percent, the nominal interest rate is:

• A) 2 percent.
• B) 0 percent.
• C) 4 percent.
• D) −2 percent.

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Definitions:

Passive Activity

Economic actions in which the participant does not materially participate, often relating to certain types of business ventures or investments.

Proactive

Characterizes an approach that anticipates and initiates change rather than reacting to events.

Contingency Planning

The process of preparing strategies to address unexpected events or emergencies that could negatively impact operations.

Changing Circumstances

Refers to the varying conditions or situations that can affect an individual's or organization's decisions and actions.