The Nominal Interest Rate Is 12 Per Cent and the Inflation

question 41

Multiple Choice

The nominal interest rate is 12 per cent and the inflation rate is 4 per cent. The opportunity cost of holding a dollar for a year is

• A) 16 cents.
• B) 12 cents.
• C) 48 cents.
• D) 8 cents.
• E) 88 cents.

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Definitions:

Anticipated Emotions

The emotions people expect to feel due to future events or outcomes.

Current Emotional States

The present feelings or mood of an individual, ranging from happiness and joy to anger and sadness.

Affect-as-information Hypothesis

A theory suggesting that people use their current emotions to make decisions and judgments in the absence of more objective information.

Affective Forecasting

Predicting how one will feel in the future after experiencing an event or making a decision.