If the Nominal Interest Rate Is 6 Percent and the Rate

question 388

Multiple Choice

If the nominal interest rate is 6 percent and the rate of inflation is 4 percent, then the real interest rate is

• A)-4 percent.
• B)2 percent.
• C)4 percent.
• D)8 percent.

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Definitions:

Cash Balance

The amount of cash held by a company at a given moment, reflecting its immediate liquidity.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company; this amount includes the cost of the materials and labor directly used to create the product.

Merchandise Inventory

Goods available for sale to customers, which can include both purchased products and those manufactured by the company.

Monthly Expenses

Recurring costs incurred by a business or individual that are expected and budgeted on a monthly basis.