With No Inflation and a Nominal Interest Rate (I)of

question 68

Multiple Choice

With no inflation and a nominal interest rate (i) of .03,a person can trade off one unit of current consumption for ________ units of future consumption.

• A)0.97
• B)1.03
• C)0.03
• D)-0.03

---

Definitions:

Capital Gain

The profit from selling a capital asset for more than its purchase price.

Dividends

Payments made by a corporation to its shareholders from the earnings of the company, usually in the form of cash or stocks.

Shares

Holdings in a corporation or financial asset, these units confer rights to an equitable distribution of dividends from declared profits.