If the Nominal Interest Rate Is 4 Percent and the Real

question 122

Multiple Choice

If the nominal interest rate is 4 percent and the real interest rate is 7 percent,then the inflation rate is

• A)-3 percent.
• B)0.75 percent.
• C)3 percent.
• D)11 percent.

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Definitions:

False News

Information that is fabricated and disseminated with the intention to deceive or mislead.

Nuclear Bomb

A weapon of mass destruction that derives its destructive force from nuclear reactions, either fission or a combination of fission and fusion.

Commonly Accepted Idea

A belief, notion, or opinion that is widely accepted or held to be true by the majority.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, known also as the "knew-it-all-along" effect.