If the Nominal Interest Rate Is 7 Percent and the Inflation

question 218

Multiple Choice

If the nominal interest rate is 7 percent and the inflation rate is 1 percent, the real interest rate is approximately

• A) 7 percent.
• B) 6 percent.
• C) 8 percent.
• D) -6 percent.

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Definitions:

Insurance Premiums

Payments made regularly to an insurance company in exchange for coverage.

Dependent

An individual who relies on another, typically a family member, for financial support and can often be claimed for tax purposes.

Medical Coverage

Insurance protection that covers part or all of an individual's healthcare expenses.

Deductible

A deductible is the amount a policyholder must pay out-of-pocket before an insurance company will cover the remaining costs of a claim.