If the Nominal Interest Rate Is 14%, and Inflation Is

question 20

Multiple Choice

If the nominal interest rate is 14%, and inflation is 4%, what is the real interest rate? Round your answer to the nearest tenth of a percent.

• A)9.1%
• B)9.6%
• C)-8.8%
• D)11.9%

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Definitions:

Structurally Unemployed

Unemployment that occurs due to shifts in the economy that create a mismatch between the skills of the workforce and the needs of the employers.

Frictionally Unemployed

Individuals temporarily out of work while transitioning between jobs, typically a healthy phenomenon in a dynamic economy.

Electrical Engineer

A professional who designs, develops, tests, and supervises the manufacturing of electrical equipment and systems.

Sectoral Shifts

Sectoral shifts refer to changes in the labor demand across various industries or sectors of the economy, often due to technological advances, consumer preferences, or other factors.