Suppose That the Real Interest Rate Was 3 Percent and the Inflation

question 25

Multiple Choice

Suppose that the real interest rate was 3 percent and the inflation rate was 1 percent. What happened with the value of savings?

• A) The dollar value of savings increased at 2 percent, and the value of savings measured in goods increased at 3 percent.
• B) The dollar value of savings increased at 1 percent, and the value of savings measured in goods increased at 2 percent.
• C) The dollar value of savings increased at 3 percent, and the value of savings measured in goods increased at 1 percent.
• D) The dollar value of savings increased at 4 percent, and the value of savings measured in goods increased at 3 percent.

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Definitions:

Stem-And-Leaf

A graphical representation that organizes data points by splitting each value into a "stem" (the leading digit or digits) and a "leaf" (the final digit).

Skewed

A description of a distribution that is not symmetrical, with a longer tail on one side of the peak than on the other, often indicating the presence of outliers.

Profits

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining that activity.

Outliers

Data points that significantly deviate from the rest within a random population sample, appearing at an unusually large distance from other values.