Suppose the Nominal Interest Rate Was 5 Percent and the Inflation

question 19

Multiple Choice

Suppose the nominal interest rate was 5 percent and the inflation rate was 3.5 percent.

• A) The dollar value of savings increased at 1.5 percent, and the value of savings measured in goods increased at 3.5 percent.
• B) The dollar value of savings increased at 3.5 percent, and the value of savings measured in goods increased at 1.5 percent.
• C) The dollar value of savings increased at 3.5 percent, and the value of savings measured in goods increased at 5 percent.
• D) The dollar value of savings increased at 5 percent, and the value of savings measured in goods increased at 1.5 percent.

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Definitions:

Chronic Stress Phase

A prolonged period of stress without adequate relief, leading to various physical and psychological health issues.

General Adaptation Syndrome

A three-stage response (alarm, resistance, exhaustion) that describes the physiological changes the body goes through under stress.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical activity by increasing heart rate, constricting blood vessels, and raising blood pressure.

Alarm Phase

The initial reaction of the body's stress response, involving the activation of the sympathetic nervous system.