If the Nominal Interest Rate Is 0 Percent and the Real

question 119

Multiple Choice

If the nominal interest rate is 0 percent and the real interest rate is 2 percent,what is the inflation rate?

• A) 2 percent
• B) −2 percent
• C) 0 percent
• D) −4 percent

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Definitions:

Cash Payments Journal

A financial journal that records all cash payments made by a business, including expenses, purchases, and debt payments.

Sales Discounts

Reductions granted by sellers to buyers from the listed price as an incentive for early payment.

Accounts Payable

Liabilities or amounts owed by a company to its creditors for goods and services that have been delivered but not yet paid for.

Cash

Money in the form of currency, including coins and banknotes, that is readily available for use.