In Year 1 the Price Level Is Constant and the Nominal

question 132

Multiple Choice

In year 1 the price level is constant and the nominal rate of interest is 6 percent. But in year 2 the inflation rate is 3 percent. If the real rate of interest is to remain at the same level in year 2 as it was in year 1, then in year 2 the nominal interest rate must

• A)rise by 9 percentage points.
• B)rise by 3 percentage points.
• C)fall by 3 percentage points.
• D)rise by 6 percentage points.

---

Definitions:

Essay Method

A trait approach to performance rating that requires the rater to compose a statement describing employee behaviour.

Critical Incidents Method

A performance appraisal method focusing on the most significant actions of an employee, either positively or negatively impacting their job effectiveness.

Graphic Rating Scale

A method used in performance evaluations that involves marking an employee's level of performance on a chart with predefined categories.

Essay Method

A performance appraisal technique where evaluators write a narrative description of an employee's strengths, weaknesses, and potential.