If the Nominal Interest Rate Is 5 Percent and the Rate

question 115

Multiple Choice

If the nominal interest rate is 5 percent and the rate of inflation is 10 percent,what is the real interest rate?

• A) -5 percent
• B) -2 percent
• C) 2 percent
• D) 5 percent

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Definitions:

Fiat Currencies

Money that a government has declared to be legal tender, though it is not backed by a physical commodity.

Digital Currencies

Electronic money that exists in a digital form, enabling instant transactions and borderless transfer-of-ownership.

Valueless

Lacking in value, importance, or utility; having no worth or significance.

Constant Value

A value that remains unchanged over a period of time, despite external factors or conditions that might otherwise cause variation.