Which of the Following Statements Is True

question 69

Multiple Choice

Which of the following statements is true?

• A)The rate of inflation is the difference between the real interest rate and a nominal interest rate.
• B)The real interest rate is the product of a nominal interest rate and the expected rate of inflation.
• C)The real interest rate is the difference between a nominal interest rate and the expected rate of inflation.
• D)The nominal interest rate is the difference between a real interest rate and the expected rate of inflation.

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Definitions:

Private Loan

A loan sourced from a private entity or individual, as opposed to a government or public lender.

Accrued Interest

Interest that has been incurred but not yet paid, typically relating to bonds or loans.

Pay Off

To completely settle a debt or an obligation.

Compounded Quarterly

A method of calculating interest where the interest is added to the principal balance four times a year.