The Nominal Interest Rate Is 12 Per Cent and the Inflation

question 41

Multiple Choice

The nominal interest rate is 12 per cent and the inflation rate is 4 per cent. The opportunity cost of holding a dollar for a year is

• A) 16 cents.
• B) 12 cents.
• C) 48 cents.
• D) 8 cents.
• E) 88 cents.

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Definitions:

Placebo Effect

The phenomenon by which patients experience a perceived or actual improvement in their condition solely due to their belief in the efficacy of a treatment, regardless of its actual therapeutic value.

Illusory Correlation

The cognitive bias of perceiving a relationship between variables (typically people, events, or behaviors) even when no such relationship exists.

Representative Sample

A subset of a population that accurately reflects the members of the entire population.

Laboratory Environment

A controlled setting designed for scientific experiments, research, or testing, often equipped with specific instruments and materials.