The Real Rate of Interest Is the

question 45

Multiple Choice

The real rate of interest is the

• A) money rate of interest plus the inflationary premium.
• B) money rate of interest minus the inflationary premium.
• C) yield one can expect to receive on loanable funds without taking significant risk.
• D) risk component associated with the ownership of real assets.

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Definitions:

Incentive

An external stimulus that motivates behavior (for example, money or fame).

Drive-Reduction Theory

A theory suggesting human behavior is motivated by the desire to reduce internal drives of needs, such as hunger.

Getting Some Food

The act of obtaining food to satisfy hunger, which can encompass a range of behaviors from purchasing food at a store to preparing a meal.

Sleeping

The natural state of rest for the mind and body, characterized by altered consciousness and reduced sensory activity.