Suppose, Over the Past Year, the Real Interest Rate Was

question 195

Multiple Choice

Suppose, over the past year, the real interest rate was 3 percent and the inflation rate was 1 percent.

• 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:

Pensions

Retirement plans that provide a fixed income to individuals who are no longer working due to age or disability.

Stock Options

Financial incentives given to employees, granting them the right to buy company shares at a set price after a certain period.

Executive Base Pay

The core salary paid to an executive, not including bonuses, incentives, and other forms of compensation.

Options Granted

Refers to the provision of stock options to employees as a form of compensation, giving them the right to purchase company stock at a future date at a predetermined price.