Which of the Following Statements About Real and Nominal Interest

question 18

Multiple Choice

Which of the following statements about real and nominal interest rates is correct?

• A)When the nominal interest rate is rising,the real interest rate is necessarily rising;when the nominal interest rate is falling,the real interest rate is necessarily falling.
• B)If the nominal interest rate is 4 percent and the inflation rate is 3 percent,then the real interest rate is 7 percent.
• C)An increase in the real interest rate is necessarily accompanied by either an increase in the nominal interest rate,an increase in the inflation rate,or both.
• D)When the inflation rate is positive,the nominal interest rate is necessarily greater than the real interest rate.

Understand challenges faced by cross-cultural researchers, including issues of random assignment and control.

Explore the effects of cultural practices on social and cognitive development.

Understand how culture affects cognition and logical reasoning.

Recognize the role of education, literacy, and context in categorization and reasoning abilities across cultures.

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Definitions:

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments, calculating the interest rate at which the net present value of all cash flows (both positive and negative) from a project or investment equals zero.

Required Rate of Return

The minimum annual percentage return that an investor expects to achieve when investing in a particular asset or project.

NPV

Net Present Value, a financial metric used to assess the profitability of an investment, calculated as the difference between the present value of cash inflows and outflows.

IRR

Internal Rate of Return is a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.