Suppose You Postpone Consumption and Invest at 6% When Inflation

question 14

Multiple Choice

Suppose you postpone consumption and invest at 6% when inflation is 2%.What is the approximate real rate of your reward for saving?

• A)6%
• B)5%
• C)4%
• D)3%

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Definitions:

Distention

The act or condition of being stretched, swollen, or inflated due to pressure from within.

Stomach

Large sac between the esophagus and the small intestine, lying just beneath the diaphragm.

Enterogastric Reflex

A physiological process that slows the emptying of the stomach contents into the small intestine.

Duodenal Wall

The lining of the duodenum, which is the first part of the small intestine immediately beyond the stomach.