If a Person Earns an 8 Percent Nominal Rate of Interest

question 26

Multiple Choice

If a person earns an 8 percent nominal rate of interest on his savings account in a year when inflation is 9 percent, the person's real rate of interest is

• A) −1 percent.
• B) 1 percent.
• C) 8 percent.
• D) 9 percent.

---

Definitions:

Psyche

The human soul, mind, or spirit, often used to denote the psychological components of a person, including thoughts, feelings, and consciousness.

Capacities

Refers to the potential or ability to perform, yield, or withstand something; often used to describe an individual's mental or physical aptitude.

Mid-Life

A period in an individual's lifespan, typically considered to be between the ages of 40 and 60, often associated with a midlife crisis.

Confrontation

The act of facing or dealing directly with issues, challenges, or opposition, often involving direct communication or conflict.