According to the Fischer Effect,if the "Real" Rate of Interest

question 90

Multiple Choice

According to the Fischer effect,if the "real" rate of interest in a country is 4 percent and expected annual inflation is 9 percent,the "nominal" interest rate will be _____.

• A) 5 percent
• B) 13 percent
• C) 9 percent
• D) 36 percent
• E) 2.25 percent

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Definitions:

Technology Spillover

Occurs when technological advances or innovations benefit other sectors or industries, beyond the original intention.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with environmental, health, and social issues.

Government Subsidized

A financial contribution provided by the government to support industries, businesses, or individuals, often aimed at achieving economic or social objectives.

Negative Externalities

Costs suffered by a third party due to an economic transaction that they were not directly involved in, often leading to market failure.