Which of the Following Statements Best Describes the Real Interest

question 64

Multiple Choice

Which of the following statements best describes the real interest rate?

• A) Real interest rates exceed inflation rates.
• B) Real interest rates can decline only to zero.
• C) Real interest rates can be negative, zero, or positive.
• D) Real interest rates traditionally exceed nominal rates.

---

Definitions:

Representativeness Heuristic

A cognitive shortcut that involves judging the probability of an event by its similarity to a prototype or example.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Heuristic

A rule-of-thumb or shortcut that is used to make decisions or solve problems more quickly.

Algorithm

A step-by-step procedure for calculations, data processing, and automated reasoning tasks.