The Approximate Nominal Interest Rate Is Computed as the Real

question 2

Multiple Choice

The approximate nominal interest rate is computed as the real rate:

• A)minus the risk-free rate.
• B)minus the inflation rate.
• C)plus the risk-free rate.
• D)plus the inflation rate.
• E)divided by the inflation rate.

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Definitions:

Threshold

The level of strength a stimulus must reach to be detected or to produce a response.

Weber's Law

A principle in psychology that posits the smallest noticeable difference in stimulus intensity is proportional to the intensity of the original stimulus.

Notice A Difference

The act of observing or identifying a change or dissimilarity between two or more things, often an initial step in analytical or critical thinking processes.

Psychophysical Function

The relationship between physical stimuli and the sensations and perceptions they produce.