If the Nominal Interest Rate Is 10 Percent and the Inflation

question 137

Multiple Choice

If the nominal interest rate is 10 percent and the inflation rate is 4 percent, then the real interest rate is

• A)14 percent.
• B)6 percent.
• C)2.5 percent.
• D).4 percent.

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Definitions:

Markup Percent

The markup on the original cost of goods intended to cover running costs and generate profit.

Selling Price

The amount of money a buyer pays to acquire a product or service from a seller.

Markup Percent

A percentage added to the cost price to determine the selling price.

Cost

Cost refers to the amount of money or resources expended to obtain a good or service, including production, materials, labor, and other expenses.