You Want to Earn a Real Rate of Return of 3.75

question 47

Multiple Choice

You want to earn a real rate of return of 3.75 percent at a time when the inflation rate is 2.33 percent.What is the approximate nominal rate which you must earn?

• A) 5.78 percent
• B) 5.96 percent
• C) 6.08 percent
• D) 6.14 percent
• E) 6.28 percent

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Definitions:

Cournot Model

A model in economic theory that describes an industry structure where companies compete on the basis of quantity produced, leading to a specific equilibrium.

Collusion Laws

refer to regulations aimed at preventing firms or individuals from working together to manipulate prices, limit competition, or engage in other practices deemed unfair or anti-competitive.

Oligopolies

Market structures characterized by a small number of firms dominating the industry, often leading to limited competition and higher prices.

Price-leadership Model

A strategy where the dominant firm in a market sets the price of goods or services, and other firms in the industry follow suit.