The Nominal Interest Rate Is 5 Percent and the Real

question 371

Multiple Choice

The nominal interest rate is 5 percent and the real interest rate is 2 percent. What is the inflation rate?

• A)10 percent
• B)7 percent
• C)3 percent
• D)2.5 percent

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Definitions:

Loyal

The quality of being faithful or devoted to a person, country, group, or cause.

Stockholders

Individuals or entities that own shares of stock in a corporation, making them partial owners of the company.

Marginal Efficiency

The rate of return on an investment that is additional or marginal to the current level of investment.

Capital

Assets or resources, such as machinery, buildings, or money, that can be used to produce goods and services and generate wealth.