If the Nominal Interest Rate Is Greater Than the Real

question 32

Multiple Choice

If the nominal interest rate is greater than the real interest rate,

• A) it is an indication of economic growth.
• B) the real interest rate must be negative.
• C) inflation must be occurring.
• D) lenders must lose because they can only make loans using the real interest rate.
• E) None of the above answers is correct because it is not possible for the nominal interest rate to exceed the real interest rate.

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Definitions:

Glottis

The opening between the vocal cords in the larynx, through which air passes during respiration and which is used in producing vocal sounds.

Epiglottis

A leaf-shaped flap of cartilage located behind the tongue, which closes over the windpipe during swallowing to prevent food from entering the airways.

Nasal Cavity

The interior space of the nose, lined with mucosa, involved in breathing and the olfactory process.

Pharynx

A muscular tube that connects the mouth and nasal passages with the esophagus and larynx, playing a key role in both the respiratory and digestive systems.