The Real Rate of Return on Holding Cash Is Equal

question 38

Multiple Choice

The real rate of return on holding cash is equal to:

• A)the nominal interest rate.
• B)the real interest rate.
• C)the expected inflation rate.
• D)zero minus the inflation rate.

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Definitions:

Random Variable

A random variable is a variable whose values depend on outcomes of a random phenomenon.

Manufacturer

An entity or company that makes goods for sale through the process of manufacturing.

Net Income

The amount of profit that remains after all operating expenses, taxes, and interest have been deducted from total revenue.

Random Variable

A variable that can take on different values randomly, subject to a certain probability distribution.