If the Real Interest Rate Is 4 Percent and the Inflation

question 119

Multiple Choice

If the real interest rate is 4 percent and the inflation rate is 9 percent, then the nominal interest rate equals:

• A)4 percent.
• B)9 percent.
• C)13 percent.
• D)36 percent.

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Definitions:

Unearned Revenues

Income received by a company for goods or services yet to be delivered or performed, considered a liability until earned.

Revenues

The total income generated by a company from its normal business operations, before any expenses are subtracted.

Debits

Entries made on the left-hand side of an account, representing an increase in assets or expenses or a decrease in liabilities, equity, or revenue.

Increase Side

Typically refers to the side of an account (debit or credit) used to record increases in that account, varying by the type of account.