Last Year, You Earned a Rate of Return of 11

question 27

Multiple Choice

Last year, you earned a rate of return of 11.29 percent on your bond investments. During that time, the inflation rate was 4.6 percent. What was your real rate of return?

• A) 5.30 percent
• B) 5.60 percent
• C) 5.75 percent
• D) 6.40 percent
• E) 6.70 percent

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market stability.

Shortage

A shortage occurs when the demand for a product exceeds its supply at a particular price, leading to a scarcity of the product.

Price Floor

A government-imposed limit below which prices cannot fall, often used in agricultural markets.

Equilibrium Price

The price at which the quantity of goods demanded equals the quantity of goods supplied, leading to market stability.