The Nominal Interest

question 4

Multiple Choice

The nominal interest

• A)will never be negative.
• B)can be negative if inflation is unexpected.
• C)can be negative if the inflation rate is greater than the nominal interest rate.
• D)can be negative if deflation occurs.
• E) can be negative when the real interest rate is negative.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Contribution Format

A type of income statement where costs are segregated into variable and fixed, highlighting the contribution margin.

Contribution Margin Ratio

The ratio of Contribution Margin to Sales Revenue, indicating the percentage of each sales dollar remaining after variable costs are deducted.

Contribution Format

An income statement format that separates fixed costs from variable costs to highlight the contribution margin.