Suppose You Are Earning 5 Percent Nominal Interest on Your

question 175

Multiple Choice

Suppose you are earning 5 percent nominal interest on your savings account.If the rate of inflation is 3 percent,the real rate of interest you are earning is

• A)2 percent.
• B)3 percent.
• C)5 percent.
• D)8 percent.

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Definitions:

Teff

A grain native to Ethiopia and Eritrea, known for its nutritional properties and used to make traditional dishes like injera.

Newsprint

A low-cost, non-archival paper commonly used for newspapers and other publications.

Supply

The total amount of a specific good or service that is available to consumers, usually determined by price, production costs, and market demand.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.