If the Bank Posts a Nominal Interest Rate of Seven

question 29

Multiple Choice

If the bank posts a nominal interest rate of seven per cent per year and the inflation rate is four per cent per year, then the real interest rate is:

• A)minus three per cent
• B)three per cent
• C)four per cent
• D)11 per cent

---

Definitions:

Milk

A nutrient-rich liquid food produced by the mammary glands of mammals, commonly consumed by humans.

Market Equilibrium

A condition or state in which the supply of a product matches its demand, leading to a stable price.

Surplus

An excess amount of a product or resource compared to the demand for it.

Minimum Wage

The lowest legal hourly rate of pay that employers can compensate workers.