To Obtain an Approximate Estimate of the Real Interest Rate

question 44

Multiple Choice

To obtain an approximate estimate of the real interest rate, one must ________ the nominal risk-free rate.

• A)add the default premium to
• B)subtract the default premium from
• C)add the expected inflation to
• D)subtract the expected inflation from

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Definitions:

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention.

Unconditioned Response

An automatic, natural response to a stimulus that occurs without prior learning or conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after being paired with an unconditioned stimulus, elicits a conditioned response.

Unlearned Reaction

A natural, instinctive response to a stimulus that occurs without the need for prior learning or experience.