If the Nominal Interest Rate Is 5 Percent and the Rate

question 43

Multiple Choice

If the nominal interest rate is 5 percent and the rate of inflation is 9 percent,then the real interest rate is

• A)-4 percent.
• B)-0.44 percent.
• C)4 percent.
• D)14 percent.

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Definitions:

Credit Sales

Credit sales are transactions where goods or services are provided to a customer with the agreement that payment will be made at a later date.

Liability Classification

The process of categorizing liabilities on the balance sheet as either current (due within one year) or long-term.

Short-Term Obligation

A debt or other financial obligation that is due to be paid within one year or within the entity's operating cycle if longer.

Long-Term Liability

Obligations or debts due in more than one year, reflecting a company's financing activities and including loans, bonds payable, and lease obligations.