If the Nominal Interest Rate Is 8 Percent and Inflation

question 34

Multiple Choice

If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate?

• A) 11 percent
• B) 8 percent
• C) 5 percent
• D) 3 percent

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Definitions:

Yearly Observations

Refers to data points or measurements that are collected once every year.

Trend

A general direction in which something is developing or changing, observed in data over time.

Annual Time-series

A sequence of data points representing the value of a variable over a series of years.

Sequential Order

The arrangement of objects, events, or values in a specific sequence where the order is significant.