If the Nominal Interest Rate Is 6 Percent and the Rate

question 179

Multiple Choice

If the nominal interest rate is 6 percent and the rate of inflation is 2 percent,then the real interest rate is

• A) -4 percent.
• B) 2 percent.
• C) 4 percent.
• D) 8 percent.

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Definitions:

Tariffs and Trades

Government-imposed taxes on imported goods, often used to control trade balances and protect domestic industries.

Self-executing

describes a document, rule, or law that becomes effective immediately without the need for any additional action, enforcement, or formal ratification.

Non-self-executing

A term used to describe treaties or provisions that require additional legislation to be implemented domestically.

Treaties

Formal agreements between countries that are governed by international law.